What changed
RBI inserted a new sub-sub paragraph (ix) under paragraph 10(5) on 'Exposures' in the Financial Statements Directions. Banks must now disclose aggregate loans to related parties, their proportion to total credit exposure, SMA/NPA classification, provisions held, and contracts/arrangements with related parties in a prescribed table format.
What it means for you
Banks will need to track and report granular data on related party exposures, including loans and contracts, separately in their annual financial statements. This increases transparency and may require system upgrades to capture and aggregate this data accurately. Lenders must ensure compliance by the effective date or earlier if they choose early adoption.
What you must do
- Update your financial reporting templates to include the new related party exposure disclosure table.
- Identify and tag all related parties as per the Credit Risk Management Directions, 2025.
- Set up systems to capture aggregate loan values, SMA/NPA status, provisions, and contract values for related parties.
- Train finance and compliance teams on the new disclosure requirements ahead of April 1, 2026.
Who it affects
All commercial banks in India, Finance and accounting departments, Compliance and risk management teams, Auditors and board committees
What is the effective date for these new disclosure requirements?
The amendments come into force from April 1, 2026. Banks may choose to implement them earlier in entirety.
What specific data must be disclosed for related party loans?
Banks must disclose aggregate value of loans sanctioned during the year, outstanding loans as on March 31, their proportion to total credit exposure, SMA/NPA classification, and provisions held.
Does this apply to contracts and arrangements with related parties as well?
Yes, banks must also disclose the aggregate value of contracts and arrangements awarded to related parties during the year and outstanding as on March 31.