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RBI's 7th Amendment to Bank Financial Statement Directions

Live · in forceNo withdrawal recorded as of 20 Jun 2026. Reviewed by Vikram Jain; always verify against the official RBI source below.
Issued by RBI: 27 Apr 2026  ·  Decoded by BankPulse: 19 Jun 2026, 01:02 IST
⏱ ~2 min read
📄 Official RBI source ↗
Quick answerRBI updated financial statement presentation rules for commercial banks, aligning with new asset classification directions. Key changes include separate disclosure of Stage 1 and 2 provisions, revised interest income computation for certain assets, and auditor qualification exemption for Stage 3 income non-recognition.

What changed

The amendment modifies the Directions to align with the new Asset Classification Directions. It requires Stage 1 and 2 provisions to be shown separately under 'Others' in Schedule 5, not netted from advances. Interest income computation for assets under paragraph 17 of the new classification directions must follow those rules. The broken period interest expense capitalization rule for government securities is deleted. Non-recognition of income on Stage 3 assets will not trigger auditor qualification. Impairment standard for non-banking assets generally applies only when impairment indicators are evident. A transitional arrangement for regulatory capital is inserted.

What it means for you

Banks must update their balance sheet and profit and loss account presentation to reflect the new provisioning and income recognition rules. The separate disclosure of Stage 1 and 2 provisions increases transparency but may impact reported net advances. The deletion of broken period interest capitalization simplifies accounting but could affect investment cost calculations. The auditor qualification exemption reduces compliance burden for Stage 3 income non-recognition. Banks need to ensure systems capture these changes accurately for regulatory reporting.

What you must do

Who it affects

All commercial banks in India, Bank finance and accounting teams, Statutory auditors of banks, Regulatory reporting departments

What happens to the broken period interest on government securities?

Banks can no longer capitalize broken period interest as part of investment cost; it must be booked as an expense.

Track this rule
⏳ How this rule evolved — History Map →Full RBI rulebook crosswalk →
AI-drafted · 3-model AI consensus fact-check · under the editorial review of Vikram Jain · decoded & published by BankPulse · 19 Jun 2026, 01:02 IST
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13393&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by Vikram Jain. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.