What changed
The definition of 'Revenue Reserve' in Schedule 2(IV) was updated to exclude amounts retained for depreciation, renewals, asset diminution, or known liabilities. A new paragraph 10(3)(vi) mandates a table showing movement of provisions for non-performing investments (NPIs), with opening balance, additions, write-offs/write-backs, and closing balance.
What it means for you
LABs must now clearly separate revenue reserves from other retained amounts, ensuring consistency with investment portfolio classification rules. The new NPI provision movement table increases transparency on how banks manage bad investment exposures, aligning with broader RBI disclosure norms.
What you must do
- Update your financial statement templates to reflect the revised 'Revenue Reserve' definition in Schedule 2(IV).
- Add the new 'Movement of provisions for non-performing investments (NPIs)' table under paragraph 10(3)(vi) in annual disclosures.
- Ensure your reporting systems capture opening balance, provisions made, write-offs/write-backs, and closing balance for NPI provisions.
- Train finance and compliance teams on the amended disclosure requirements effective from May 18, 2026.
Who it affects
Local Area Banks (LABs), LAB finance and compliance departments, Auditors reviewing LAB financial statements
When do these amendments take effect?
The directions are effective from the date of issue, May 18, 2026, so LABs must apply them immediately for financial statements prepared after this date.
What exactly is the new NPI provision movement table?
It requires LABs to disclose a table showing the opening balance of provisions for non-performing investments, additions during the year, write-offs or write-backs, and the closing balance, all in ₹ crore.