The Reserve Bank of India issued the Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Third Amendment Directions, 2026 on May 18, 2026, amending the 2025 Directions governing financial statement presentation and disclosures for Local Area Banks. The amendments were introduced following the issuance of revised investment portfolio classification and valuation norms and were issued under Section 35A of the Banking Regulation Act, 1949. The revised directions clarify the meaning of “Revenue Reserve,” stating that it includes all reserves other than capital reserves and excludes provisions made for depreciation, asset diminution, renewals, or known liabilities. Further, the amendment substitutes the disclosure format relating to “Movement of provisions for non-performing investments (NPIs),” requiring banks to disclose opening balances, provisions made during the year, write-offs or write-backs, and closing balances. The amendments came into immediate effect from the date of issue and are intended to strengthen uniformity and transparency in financial disclosures by Local Area Banks.
Reserve Bank of India
RBI/2026-27/92
DOR.MRG.REC.No.80/21-04-018/2026-27 | Dated: May 18, 2026
Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Third Amendment Directions, 2026
Please refer to Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Directions, 2025, dated November 28, 2025.
2. On a review, consequent to the issuance of Reserve Bank of India (Local Area Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026, and in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (hereinafter called the Act) and all other laws enabling the Reserve Bank in this regard, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Amendment Directions hereinafter specified.
3. (i) These Directions shall be called the Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Third Amendment Directions, 2026.
(ii) These Amendment Directions shall come into effect from the date of issue.
4. The Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Directions, 2025, are amended as provided below.
(i) In the table under paragraph 5(1), notes and instructions for compilation for ‘Revenue and Other Reserves’ under Schedule 2(IV) shall be substituted by the following, namely: –
“The expression ‘Revenue Reserve’ shall mean any reserve other than Capital Reserve. This item will include all reserves, other than those separately classified. The expression ‘reserve’ shall not include any amount retained by way of providing for depreciation, renewals, or diminution in value of assets or retained by way of providing for any known liability.”.
(ii) Paragraph 10(3)(vi) shall be substituted by the following, namely: –
“Movement of provisions for non-performing investments (NPIs)”.
| (Amount in ₹ crore) | ||
| Particulars | Current Year | Previous Year |
| i) Movement of provisions held towards NPIs
a) Opening balance b) Add: Provisions made during the year c) Less: Write off / write back of excess provisions during the year d) Closing balance |
||
(Sunil T S Nair)
Chief General Manager
