What changed
RBI inserted a new sub-paragraph (ix) under paragraph 10(5) of the SFB Financial Statements Directions, 2025. This requires SFBs to disclose details of exposures to related parties as defined in the Credit Risk Management Directions, 2025. The disclosure includes a table with aggregate loan values, outstanding amounts, SMA/NPA classification, provisions, and contract values.
What it means for you
Small Finance Banks must now provide granular, standardized disclosures on related party transactions in their notes to accounts. This enhances transparency and aligns with credit risk management norms. Banks need to update their reporting systems to capture and present this data accurately from FY2026-27 onwards.
What you must do
- Update financial reporting templates to include the new related party exposure table.
- Ensure systems capture data on loans, contracts, and provisions for related parties as per the prescribed format.
- Train finance and compliance teams on the new disclosure requirements effective April 1, 2026.
- Review related party definitions under the Credit Risk Management Directions to ensure consistency.
Who it affects
Small Finance Banks, Compliance and finance departments of SFBs, Auditors reviewing SFB financial statements
When do these new disclosure requirements take effect?
The amendments come into force from April 1, 2026, though banks may choose to implement them earlier.
What specific information must be disclosed in the new table?
SFBs must disclose aggregate loans sanctioned and outstanding to related parties, their proportion of total credit exposure, SMA/NPA classification, provisions held, and details of contracts and arrangements with related parties.
Which regulation defines 'related parties' for this disclosure?
The definition of related parties is as per the Reserve Bank of India (Small Finance Banks – Credit Risk Management) Directions, 2025.