RBI (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025

The Reserve Bank of India has issued the Urban Co-operative Banks – Financial Statements: Presentation and Disclosures Directions, 2025, effective from their publication on the RBI website. Applicable to all urban co-operative banks (primary co-operative banks under the Banking Regulation Act, 1949), the Directions prescribe uniform formats for balance sheets and profit and loss accounts as per the Third Schedule of the Act and mandate full compliance with ICAI Accounting Standards applicable to Level-I enterprises, subject to RBI instructions. Detailed guidance is provided on the application of key standards, including treatment of prior period items, revenue recognition for non-performing assets, foreign exchange accounting using FEDAI rates, segment reporting, related-party disclosures with confidentiality safeguards, accounting for associates and joint ventures, impairment of assets, interim reporting, and intangible assets with dividend restrictions. The Directions significantly expand mandatory “Notes to Accounts” disclosures, covering regulatory capital composition, reserve drawdowns, asset-liability maturity profiles, and comparative information, aiming to enhance transparency, consistency, and comparability of UCB financial reporting.

RESERVE BANK OF INDIA

RBI/DoR/2025-26/289
DoR.ACC.REC.No.208/21.04.018/2025-26 | Dated: November 28, 2025

Reserve Bank of India (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025

In exercise of the powers conferred by Section 35A read with Section 56 of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.

Chapter-I Preliminary

A. Short title and commencement

1. These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025.

2. These Directions shall come into effect on the day these are placed on the official website of the Reserve Bank of India.

B. Applicability

3. These Directions shall be applicable to Urban Co-operative Banks (hereinafter collectively referred to as ‘banks’ and individually as a ‘bank’).

In this context, urban co-operative banks shall mean Primary Co-operative Banks as defined under section 5(ccv) read with Section 56 of Banking Regulation Act, 1949.

Chapter-II Balance sheet and profit and loss account

A. Format of the balance sheet and profit and loss account

4. In terms of the provisions of Section 29 read with Section 56 of the Banking Regulation Act, 1949 (BR Act, 1949), a bank shall in respect of all business transacted by it prepare a Balance Sheet and Profit and Loss Account as on the last working day of the year or the period, as the case may be, in the Forms set out in the Third Schedule of the BR Act, 1949 as substituted by clause (zl) of Section 56 of the said Act.

B. Notes and instructions for compilation

5. A bank shall be guided by the announcements of the Institute of Chartered Accountants of India (ICAI) regarding applicability of Accounting Standards, subject to Directions / Guidelines issued by the Reserve Bank of India. As per prevailing pronouncements of the ICAI, co-operative banks are classified as Level-I enterprises. Level-I enterprises are required to comply with all the accounting standards.

Note: Mere mention of an activity, transaction or item in the Directions does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity or transaction.

C. Guidance on specific issues with respect to certain Accounting Standards

6. A bank shall also be guided by the following with respect to relevant issues in the application of certain Accounting Standards for the bank.

(1) Accounting Standard 5 – Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

(i) The objective of this Standard is to prescribe the classification and disclosure of certain items in the statement of profit and loss so that all enterprises prepare and present such a statement on a uniform basis.

(ii) Accordingly, this Standard requires the classification and disclosure of extraordinary and prior period items, and the disclosure of certain items within profit or loss from ordinary activities. It also specifies the accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in accounting policies.

(iii) Paragraph 4.3 of Preface to the Statements on Accounting Standards issued by the ICAI states that Accounting Standards are intended to apply only to items which are material. Since materiality is not objectively defined, it has been decided that all a bank should ensure compliance with the provisions of the Accounting Standard in respect of any item of prior period income or prior period expenditure which exceeds one percent of the total income / total expenditure of the bank if the income / expenditure is reckoned on a gross basis or one percent of the net profit before taxes or net losses as the case may be if the income is reckoned net of costs.

(iv) Since the format of the profit and loss accounts of a bank prescribed in Form B under Third Schedule to the BR Act, 1949, does not specifically provide for disclosure of the impact of prior period items on the current year’s profit and loss, such disclosures, wherever warranted, may be made in the ‘Notes on Accounts’ to the balance sheet of a bank.

(2) Accounting Standard 9 – Revenue Recognition

(i) Non-recognition of income by the bank in case of non-performing advances and non-performing investments, in compliance with the regulatory prescriptions of the Reserve Bank of India, shall not attract a qualification by the statutory auditors as this would be in conformity with provisions of the standard, as it recognises postponement of recognition of revenue where collectability of the revenue is significantly uncertain.

(3) Accounting Standard 11 – The Effects of Changes in Foreign Exchange Rates

AS 11 is applied in the context of the accounting for transactions in foreign currencies. The issues that arise in this context have been identified and a bank shall be guided by the following while complying with the provisions of the standard.

(i) Exchange rate for recording foreign currency transactions

(a) As per paragraphs 9 and 21 of the Standard, a foreign currency transaction shall be recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. A bank may face difficulty in applying the exchange rate prevailing at the date of the transaction in respect of the items which are not being recorded in Indian Rupees or are currently being recorded using a notional exchange rate.

(b) A bank, which is in a position to apply the exchange rate prevailing on the date of the transaction for recording the foreign currency transactions as required under AS 11 shall comply with the requirements. A bank, which has an extensive branch network, have a high volume of foreign currency transactions and is not fully equipped on the technology front shall be guided by the following:

(i) Paragraph 10 of the Standard allows, for practical reasons, the use of a rate that approximates the actual rate at the date of the transaction. The Standard also states that if exchange rates fluctuate significantly, the use of average rate for a period is unreliable. Since the enterprises are required to record the transactions at the date of the occurrence thereof, the weekly average closing rate of the preceding week can be used for recording the transactions occurring in the relevant week, if the same approximates the actual rate at the date of the transaction. In view of the practical difficulties which a bank may have in applying the exchange rates at the dates of the transactions and since the Standard allows the use of a rate that approximates the actual rate at the date of the transaction, the bank may use average rates as detailed below:

(ii) FEDAI publishes a weekly average closing rate at the end of each week and a quarterly average closing rate at the end of each quarter for various currencies.

(iii) In respect of those foreign currency transactions, which are currently not being recorded in Indian Rupees at the date of the transaction or are being recorded using a notional exchange rate shall now be recorded at the date of the transaction by using the weekly average closing rate of the preceding week, published by FEDAI, if the same approximates the actual rate at the date of the transaction.

(iv) If the weekly average closing rate of the preceding week does not approximate the actual rate at the date of the transaction, the closing rate at the date of the transaction shall be used. For this purpose, the weekly average closing rate of the preceding week would not be considered approximating the actual rate at the date of the transaction if the difference between (A) the weekly average closing rate of the preceding week, and (B) the exchange rate prevailing at the date of the transaction, is more than three and a half per cent of (B).

(v) A bank is encouraged to equip itself to record the foreign currency transactions at the exchange rate prevailing on the date of the transaction.

(ii) Closing rate

Paragraph 7 of the Standard defines ‘Closing rate’ as the exchange rate at the balance sheet date. In order to ensure uniformity among banks, closing rate to be applied for the purposes of AS 11 (revised 2003) for the relevant accounting period would be the last closing spot rate of exchange announced by FEDAI for that accounting period.

(4) Accounting Standard 17 – Segment Reporting

The indicative formats for disclosure under ‘AS 17 – Segment Reporting’ are as below.

Format

Part A: Business segments

(Amount in ₹ crore)

Business Segments→	Treasury		Corporate /Wholesale Banking		Retail Banking		Other Banking Business		Total
Particulars ↓	Current Year	Previous Year	Current Year	Previous Year	Current Year	Previous Year	Current Year	Previous Year	Current Year	Previous Year
Revenue
Result
Unallocated expenses
Operating profit
Income taxes
Extraordinary profit / loss
Net profit
Other information:
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities

Note: No disclosure need be made in the shaded portion

Note:

a) The business segments will be ‘Treasury’, ‘Corporate / Wholesale Banking’, ‘Retail Banking’ and ‘Other banking operations’.

b) A bank shall adopt its own methods, on a reasonable and consistent basis, for allocation of expenditure among the segments.

c) ‘Treasury’ shall include the entire investment portfolio.

d) Retail Banking shall include exposures which fulfil the four criteria of orientation, product, granularity, and low value of individual exposures for retail exposures laid down in the Reserve Bank of India (Urban Co – operative Banks – Prudential Norms on Capital Adequacy) Directions, 2025. Individual housing loans will also form part of Retail Banking segment for the purpose of reporting under AS-17.

e) Corporate / Wholesale Banking includes all advances to trusts, partnership firms, companies, and statutory bodies, which are not included under ‘Retail Banking’.

f) Other Banking Business includes all other banking operations not covered under ‘Treasury, ‘Wholesale Banking’, and ‘Retail Banking’ segments. It shall also include all other residual operations such as para banking transactions / activities.

g) Besides the above-mentioned segments, a bank shall report additional segments within ‘Other Banking Business’ which meet the quantitative criterion prescribed in the AS 17 for identifying reportable segments.

(5) Accounting Standard 18 – Related Party Disclosures

The manner of disclosures required by paragraphs 23 to 26 of AS 18 is illustrated as below. It may be noted that the format given below is merely illustrative in nature and is not exhaustive.

(Amount in ₹ crore)

Items/Related Party	Parent (as per ownership or control)	Subsidiaries	Associates / Joint Ventures	Key Management Personnel	Relatives of Key Management Personnel	Total
Borrowings#
Deposits#
Placement of deposits#
Advances#
Investments#
Non-funded commitments#
Leasing / HP arrangements availed#
Leasing / HP arrangements provided#
Purchase of fixed assets
Sale of fixed assets
Interest paid
Interest received
Rendering of services*
Receiving of services*
Management contracts*

^#The outstanding at the year end and the maximum during the year are to be disclosed *Contract services etc. and not services like remittance facilities, locker facilities etc.

Note:

i) Related parties for a bank are its parent, subsidiary(ies), associates / joint ventures, Key Management Personnel (KMP) and relatives of KMP. KMP are the whole-time directors for an Indian bank. Relatives of KMP would be on the lines indicated in Section 45 S of the RBI Act, 1934.

ii) The name and nature of related party relationship shall be disclosed, irrespective of whether there have been transactions, where control exists within the meaning of the Standard. Control would normally exist in case of parent-subsidiary relationship. The disclosures may be limited to aggregate for each of the above related party categories and would pertain to the year-end position as also the maximum position during the year.

iii) Secrecy provisions: If in any of the above category of related parties there is only one related party entity, any disclosure would tantamount to infringement of customer confidentiality. In terms of AS 18, the disclosure requirements do not apply in circumstances when providing such disclosures would conflict with the reporting enterprise’s duties of confidentiality as specifically required in terms of statute, by regulator or similar competent authority. Further, in case a statute or regulator governing an enterprise prohibits the enterprise from disclosing certain information, which is required to be disclosed, non-disclosure of such information would not be deemed as non-compliance with the Accounting Standards. On account of the judicially recognised common law duty of the bank to maintain the confidentiality of the customer details, it need not make such disclosures. In view of the above, where the disclosures under the Accounting Standards are not aggregated disclosures in respect of any category of related party, i.e., where there is only one entity in any category of related party, a bank need not disclose any details pertaining to that related party other than the relationship with that related party.

(6) Accounting Standard 23 – Accounting for Investments in Associates in CFS

(a) This Accounting Standard sets out principles and procedures for recognising, in the Consolidated Financial Statements (CFS), the effects of the investments in associates on the financial position and operating results of a group.

(b) The Standard requires that an investment in an associate shall be accounted for in CFS under the equity method subject to certain exceptions.

(c) The term ‘associate’ is defined as an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture of the investor.

(d) ‘Significant influence’ is the power to participate in the financial and / or operating policy decisions of the investee but not control over those policies. Such an influence may be gained by share ownership, statute or agreement.

(e) As regards share ownership, if an investor holds, directly or indirectly through subsidiaries 20 percent or more of the voting power of the investee, it is presumed that the investor has significant influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the investor holds, directly or indirectly through subsidiaries less than 20 percent of the voting power of the investee, it is presumed that the investor does not have significant influence, unless such influence can be clearly demonstrated. A substantial or majority ownership by another investor does not necessarily preclude an investor from having significant influence.

(f) The issue is whether conversion of debt into equity in an enterprise by a bank by virtue of which the bank holds more than 20 percent will result in an investor-associate relationship for the purpose of AS 23. From the above it is clear that though a bank may acquire more than 20 percent of voting power in the borrower entity in satisfaction of its advances it may be able to demonstrate that it does not have the power to exercise significant influence since the rights exercised by it are protective in nature and not participative. In such a circumstance, such investment may not be treated as investment in associate under this Accounting Standard. Hence, the test shall not be merely the proportion of investment but the intention to acquire the power to exercise significant influence.

(7) Accounting Standard 24 – Discontinuing operations

(i) This Standard establishes principles for reporting information about discontinuing operations. Merger / closure of branches of a bank by transferring the assets / liabilities to the other branches of the same bank may not be deemed as a discontinuing operation and hence this Accounting Standard will not be applicable to merger / closure of branches of a bank by transferring the assets / liabilities to the other branches of the same bank.

(ii) Disclosures shall be required under the Standard only when:

(a) discontinuing of the operation has resulted in shedding of liability and realisation of the assets by the bank or decision to discontinue an operation which will have the above effect has been finalised by the bank and

(b) the discontinued operation is substantial in its entirety.

(8) Accounting Standard 25 – Interim Financial Reporting

(i) This Standard prescribes the minimum content of an interim financial report and the principles for recognition and measurement in a complete or condensed financial statements for an interim period.

(9) Accounting Standard 26 – Intangible asset

(i) This Standard prescribes the accounting treatment for intangible assets that are not dealt with specifically in another accounting standard. With respect to computer software which has been customised for the bank’s use and is expected to be in use for some time, the detailed recognition and amortisation principle in respect of computer software prescribed in the Standard adequately addresses these issues and may be followed by the bank.

(ii) It may be noted that intangible assets recognised and carried in the balance sheet of a bank in compliance with AS 26 shall attract provisions of Section 15(1) of the BR Act 1949, in terms of which a bank is prohibited from declaring any dividend until any expenditure not represented by tangible assets is carried in the balance sheet.

(iii) A bank desirous of paying dividend while carrying any intangible assets in its books must seek exemption from Section 15(1) of the BR Act, 1949, from the Central Government.

(10) Accounting Standard 27 – Financial Reporting of Interests in Joint Ventures

(i) This Standard is applied in accounting for interests in joint ventures and the reporting of joint venture assets, liabilities, income, and expenses in the financial statements of ventures and investors, regardless of the structures or forms under which the joint venture activities take place.

(ii) This Standard identifies three broad types of joint ventures, namely, jointly controlled operations, jointly controlled assets, and jointly controlled entities.

(iii) In case of jointly controlled entities, where a bank is required to present CFS, the investment in joint ventures shall be accounted for as per provisions of this Standard. In respect of joint ventures in the form of jointly controlled operations and jointly controlled assets, this Accounting Standard is applicable for both solo financial statements as well as CFS.

(iv) It is clarified that though paragraph 26 of the Accounting Standard prescribes that for the purpose of solo financial statements, investment in jointly controlled entities is to be accounted as per AS 13, such investment is to be reflected in the solo financial statements of the bank as per guidelines prescribed by RBI since AS 13 does not apply to banks.

(11) Accounting Standard 28 – Impairment of assets

(i) This Standard prescribes the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. It is clarified that the standard shall not apply to inventories, investments and other financial assets such as loans and advances and shall generally be applicable to a bank in so far as it relates to fixed assets.

(ii) The Standard shall generally apply to financial lease assets and non-banking assets acquired in settlement of claims only when the indications of impairment of the entity are evident.

Chapter-III Disclosure in Financial Statements – Notes to Accounts

7. A bank shall disclose information as specified in this chapter in the ‘Notes to Accounts’ of the financial statements.

Explanation 1: These disclosures are intended only to supplement and not to replace disclosure requirements under other laws, regulations, or accounting and financial reporting standards.

Explanation 2: A bank is encouraged to make disclosures that are more comprehensive than the minimum required under these Directions, especially if such disclosures significantly aid in the understanding of the financial position and performance.

A. General

8. The items listed in these Directions shall be disclosed in the ‘Notes to Accounts’ to the financial statements. A bank shall make additional disclosures where material.

B. Presentation

9. In addition to the Schedules to the balance sheet, a summary of ‘significant accounting policies’, and ‘Notes to Accounts’ shall be disclosed as separate Schedules.

C. Disclosure requirements

10. A bank shall, at the minimum, furnish the following information in the ‘Notes to Accounts’. The bank shall note that mere mention of an activity, transaction or item in the disclosure template does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity or transaction. The bank shall disclose comparative information in respect of the previous period for all amounts reported in the current period’s financial statements. Further, the bank shall include comparative information for narrative and descriptive information if it is relevant to understanding the current period’s financial statements.

(1) Regulatory capital

(i) Composition of regulatory capital

(Amount in ₹ crore)

Sr. No.	Particulars	Current Year	Previous Year
i)	Paid up share capital and reserves (net of deductions, if any)
ii)	Other Tier 1 capital
iii)	Tier 1 capital (i + ii)
iv)	Tier 2 capital
v)	Total capital (Tier 1 + Tier 2)
vi)	Total Risk Weighted Assets (RWAs)
vii)	Tier 1 Ratio (Tier 1 capital as a percentage of RWAs)
viii)	Tier 2 Ratio (Tier 2 capital as a percentage of RWAs)
ix)	Capital to Risk Weighted Assets Ratio (CRAR) (Total Capital as a percentage of RWAs)
x)	Amount of paid-up equity capital raised during the year
xi)	Amount of non-equity Tier 1 capital raised during the year, of which: Give list* asper instrument type (perpetual non – cumulative preference shares, perpetual debt instruments, etc.).
xii)	Amount of Tier 2 capital raised during the year, of which Give list** as per instrument type (perpetual non – cumulative preference shares, perpetual debt instruments, etc.).

* Example: A bank may disclose as under

	Current year	Previous year
Amount of non-equity Tier 1 capital raised during the year of which:	###	###
a)Perpetual Non – Cumulative Preference Shares	###	###
b)Perpetual Debt Instruments	###	###

**Example: A bank may disclose as under:

	Current year	Previous year
Amount of Tier 2 capital raised during the year of which:	###	###
a)Perpetual Cumulative Preference Shares	###	###
b)Long term subordinated debt instruments	###	###
c)	###	###

(ii) Draw down from Reserves

Suitable disclosures mentioning the amount and the rationale for withdrawal shall be made regarding any draw down from reserves.

(2) Asset liability management

(i) Maturity pattern of certain items of assets and liabilities

(Amount in ₹ crore)

Day 1

2 to 7 days

8 to 14 days

15 to 30 days

31 days to 2 months

Over 2 months and to 3 months

Over 3 months and up to 6 Months

Over 6 months and up to 1 year

Over 1 year and up to 3 years

Over 3 years and up to 5 years

Over 5 years

Total

Deposits

Advances

Investments

Borrowings

Foreign Currency assets

Foreign Currency liabilities

Note:

A bank shall be guided by the Reserve Bank of India (Urban Co-operative Banks – Asset Liability Management) Directions, 2025, as amended from time to time.

Chapter-IV Other Instructions

A. Inter-branch account – provisioning for net debit balance

11. A bank shall adhere to following guidelines for unreconciled inter-branch account entries.

(1) The bank shall segregate the credit entries outstanding for more than five years in the inter-branch account and transfer them to a separate ‘Blocked Account’ which shall be shown under ‘Other Liabilities-Suspense’.

(2) Any adjustment from the Blocked Account should be permitted only with the authorisation of two officials, one of whom should be from the Controlling / Head Office if the amount exceeds ₹ One lakh.

(3) The balance in Blocked Account shall be reckoned as a liability for the purpose of the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

(4) The bank shall maintain category-wise (head-wise) accounts for various types of transactions put through inter-branch accounts, so that the netting can be done category-wise. As on the balance sheet date, the bank shall segregate the debit and credit entries remaining unreconciled for more than six months and arrive at the net position category-wise, while also considering the balance in the Blocked Account.

(5) The net debit under all the categories of inter-branch accounts shall be aggregated and a provision equivalent to 100 per cent of the aggregate net debit shall be made.

Provided that the bank shall ensure that the net debit in one category is not set-off against net credit in another category.

B. Reconciliation of Nostro account and treatment of outstanding entries

12. Treatment of outstanding entries in Nostro accounts shall of a bank shall be as under.

(1) The bank shall take steps to have a strong control over reconciliation and put in place a system of real-time reconciliation, which provides for immediate escalation of differences, if any.

(2) There shall be close monitoring of pending items in Nostro accounts by top management at short intervals.

(3) All unreconciled credit entries in Nostro accounts which are outstanding for more than three years shall be transferred to a Blocked Account and shown as outstanding liabilities.

(4) The balance in the Blocked Account shall be reckoned for the purpose of CRR / SLR.

(5) A bank shall make 100 percent provision in respect of all unreconciled debit entries in the Nostro accounts, which are outstanding for more than two years.

C. Transfer to / appropriation from Reserve funds

13. In terms of Sections 17(1) read with Section 56 of the BR Act, 1949 a bank is required to transfer, out of the balance of profit as disclosed in the profit and loss account, a sum equivalent to not less than 20 per cent of such profit to Reserve Fund.

14. Unless specifically allowed by extant regulations, the bank shall take prior approval from the Reserve Bank of India before any appropriation is made from the Statutory Reserve or any other reserve.

15. Bank is further advised that

(1) all expenses including provisions and write-offs recognised in a period, whether mandatory or prudential, shall be reflected in the profit and loss account for the period as an ‘above the line’ item (i.e., before arriving at the net profit / loss for the year);

(2) draw down from reserves, with the prior approval of Reserve Bank of India, shall be effected only ‘below the line’ (i.e. after arriving at the net profit / loss for the year); and

(3) suitable disclosures shall be made of such draw down in the ‘Notes on Accounts’ to the Balance Sheet.

(4) Subject to compliance with applicable laws, a bank, without prior approval of Reserve Bank of India, can utilised the share premium account for meeting issue expenses of shares to the extent that such expenses are incremental costs directly attributable to the transaction that otherwise would have been avoided.

Provided that the share premium account shall not be utilised for writing off the expenses relating to the issue of debt instruments.

Explanation: For the purposes of this Direction, issue expenses shall include registration and other regulatory fees, payments made to legal, accounting, and other professional advisers, printing costs, and stamp duties.

D. Provisioning for fraud

16. In respect of provisioning for frauds, a bank that has reported the fraud within the prescribed time shall have the option to make the provision for the same over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.

17. Where the bank chooses to provide for the fraud over two to four quarters and this results in the full provisioning being made in more than one financial year, subject to compliance with applicable laws, it may debit reserves other than the Statutory Reserve by the amount remaining un-provided at the end of the financial year by credit to provisions.

Provided that it should subsequently proportionately reverse the debits to the reserves and complete the provisioning by debiting profit and loss account, in the successive quarters of the next financial year.

18. Where there has been delay, beyond the prescribed period, in reporting the fraud to the Reserve Bank, the entire provisioning is required to be made at once.

E. Unreconciled balances

19. Unreconciled credit balances in any transitory account representing unclaimed balances shall not be transferred to the profit and loss account or to any reserves.

F. Deferred tax liability (DTL) on Special Reserve created under Section 36(1) (viii) of the Income Tax Act, 1961

20. A bank shall make provisions for DTL on the Special Reserve created under Section 36(1)(viii) of Income Tax Act, 1961.

G. Payment of Fees and allowances to Directors

21. All expenses on the conduct of Board meetings shall be shown against item 3 of Profit and Loss Account, i.e., ‘Directors and Local Committee Members-Fees and Allowances”. Such expenses would include amounts actually paid to the directors and Local Committee members as also amounts spent on their behalf for attending such meetings.

H. Window dressing

22. A bank shall ensure that balance sheet and profit and loss account reflects true and fair picture of its financial position.

23. Instances of window dressing of financials, short provisioning, misclassification of NPAs, under-reporting / incorrect computation of exposure / risk weight, incorrect capitalisation of expenses, capitalisation of interest on NPAs, deliberate inflation of asset and liabilities at the end of the financial year and subsequent reversal immediately in next financial year, etc., shall be viewed seriously and appropriate penal action in terms of the provisions of the BR Act, 1949, shall be considered.

Chapter-V Repeal and Other Provisions

A. Repeal and saving

24. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to Financial Statements – Presentation and Disclosures, as applicable to Urban Co-operative Banks stands repealed, as communicated vide circular DOR.RRC.REC.302/33-01-010/2025-26 dated November 28, 2025. The Directions, instructions, and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed.

25. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these directions, instructions, or guidelines shall not in any way prejudicially affect:

a. any right, obligation or liability acquired, accrued, or incurred thereunder;

b. any penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder;

c. any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions, instructions, or guidelines had not been repealed.

B. Application of other laws not barred

26. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations, or directions, for the time being in force.

C. Interpretations

27. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions.

(Sunil T S Nair)
Chief General Manager