What changed
A new sub-paragraph (ix) under 'Exposures' in Chapter-III of the Directions requires RRBs to disclose details of loans to related parties, including aggregate sanctioned and outstanding amounts, SMA/NPA classification, provisions held, and contracts/arrangements with related parties. This follows the issuance of the Credit Risk Management Amendment Directions.
What it means for you
RRBs must now enhance transparency by reporting related party exposures in a standardized table format in their financial statement notes. This increases regulatory oversight and helps identify potential concentration risks or conflicts of interest. Banks need to update their reporting systems and ensure data capture for related party transactions from FY 2026-27 onwards.
What you must do
- Identify and define related parties per the Credit Risk Management Directions, 2025.
- Set up systems to capture and aggregate loan sanctions, outstanding amounts, SMA/NPA status, and provisions for related parties.
- Track contracts and arrangements awarded to related parties during the year.
- Prepare to disclose the required table in financial statements for periods ending March 31, 2026 and onward.
- Consider early adoption of the amendments if feasible.
Who it affects
Regional Rural Banks (RRBs), RRB compliance and finance teams, Auditors of RRBs
What is the effective date for these disclosure requirements?
The amendments come into force from April 1, 2026, but banks may choose to implement them earlier in entirety.
What specific data must be disclosed for related party loans?
RRBs must disclose aggregate value of loans sanctioned and outstanding during the year, outstanding as a proportion of total credit exposure, SMA/NPA classification, and provisions held, as per the table in the notification.
Does this apply to all contracts or just loans?
It covers both loans to related parties and other contracts/arrangements awarded to related parties, with separate disclosure for each category.