RBI Introduces Stricter Capital Market Exposure Disclosure Norms for Small Finance Banks via 2026 Amendment

The banking regulatory landscape in India continues to evolve with a focus on heightened transparency and risk management. In a significant move, the Reserve Bank of India (RBI) has issued new directives aimed at Small Finance Banks (SFBs), specifically targeting how these entities report their financial engagements within the capital markets.

The notification, identified as RBI/2025-26/219 DOR.CRE.REC.410/21.04.018/2025-26, dated February 13, 2026, promulgates the Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) – Second Amendment Directions, 2026. This amendment fundamentally alters the disclosure requirements found in the Notes to Accounts, ensuring that stakeholders have a granular view of an assessee's exposure to market volatility.

The Apex Bank has exercised its statutory powers conferred under Section 21 and Section 35A of the Banking Regulation Act, 1949. These sections empower the RBI to issue directions to banking companies in the public interest and to regulate the operations of the banking system.

The primary objective of this amendment is to modify the existing Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 (referred to as the Principal Directions). This regulatory update runs parallel to and is consequent upon the issuance of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026.

Key Amendments to Financial Statement Disclosures

The core of this regulatory update lies in the modification of Chapter-III, specifically regarding Paragraph 10(5) which deals with 'Exposures'. The amendment dictates a two-step restructuring of the reporting format:

  1. Deletion: The existing sub-paragraph 10(5)(ii) is removed from the Directions.
  2. Insertion: A new, comprehensive sub-paragraph (iia) is introduced.