RBI Mandates Enhanced Related Party Disclosures for Small Finance Banks: 2026 Amendment Directions

In a significant move to fortify corporate governance and elevate transparency standards within the niche banking sector, the Reserve Bank of India (RBI) has promulgated new regulatory directives targeting Small Finance Banks (SFBs). The central bank has introduced stringent disclosure requirements concerning exposures to related parties. These changes are enshrined in the Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) – Amendment Directions, 2026.

Dated January 05, 2026, this notification (Reference: RBI/2025-26/182 | DOR.CRE.REC.383/21.04.018/2025-26) amends the existing framework to ensure that stakeholders have a clear view of financial dealings between SFBs and their related entities. This article provides a comprehensive legal analysis of the amendment, the statutory backing, and the procedural implications for the assessee (in this context, the reporting Small Finance Bank).

The Reserve Bank of India has exercised its statutory powers to issue these directions. Specifically, the authority is derived from:

  • Section 21 of the Banking Regulation Act, 1949: This section empowers the RBI to control advances by banking companies.
  • Section 35A of the Banking Regulation Act, 1949: This grants the RBI the power to give directions to banking companies in the public interest or to prevent the affairs of any banking company from being conducted in a manner detrimental to the interests of the depositors.

The amendment serves as a supplement to the Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 (hereinafter referred to as ‘the Directions’). It also aligns with the revised risk frameworks established under the Reserve Bank of India (Small Finance Banks – Credit Risk Management) – Amendment Directions, 2026.

Key Amendments to Financial Statement Disclosures

The core of this regulatory update lies in the modification of Chapter-III, which governs ‘Disclosure in Financial Statements – Notes to Accounts’. The RBI has mandated the insertion of a new sub-paragraph, specifically 10(5)(ix), under the broader category of ‘Exposures’.

This new provision obligates every Small Finance Bank to publish a detailed breakdown of its financial exposure to related parties. The definition of "related parties" for this purpose is anchored in the Reserve Bank of India (Small Finance Banks – Credit Risk Management) Directions, 2025.

The Mandatory Disclosure Structure

The amendment prescribes a rigid tabular format for these disclosures. SFBs are no longer permitted to aggregate these figures vaguely; they must provide granular data comparing the Current Year against the Previous Year.