Reserve Bank of India amends Local Area Banks financial statement disclosures on reserves and non-performing investments

The Reserve Bank of India has amended the financial statement presentation and disclosure directions for Local Area Banks following its 2026 changes to the classification, valuation and operation of investment portfolios. The update revises how banks should present reserves and replaces the existing investment provision disclosure with a specific requirement to report movements in provisions for non-performing investments. The amendments take effect from the date of issue. Under Schedule 2(IV), "Revenue Reserve" is now defined as any reserve other than capital reserve, including all reserves not separately classified, but excluding amounts retained for depreciation, renewals, diminution in the value of assets, or known liabilities. The revised disclosure requirement under paragraph 10(3)(vi) requires Local Area Banks to show, in INR crore, the opening balance of provisions for non-performing investments, provisions made during the year, write-offs or write-backs of excess provisions during the year, and the closing balance.