DRAFT FOR COMMENTS

RBI/2025-26/--
DOR.ACC.REC.No. /00-00-000/2025-26

XX, 2025

Reserve Bank of India (Payments Banks – Financial Statements: Presentation and Disclosures) Directions, 2025

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.

Chapter I - Preliminary

A. Short title and commencement

1. These Directions shall be called the Reserve Bank of India (Payments Banks – Financial Statements: Presentation and Disclosures) Directions, 2025.

2. These Directions shall come into force with immediate effect.

B. Applicability

3. These Directions shall be applicable to Payments Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank'), subject to licensing conditions and extant operating guidelines.

Chapter II - Balance Sheet and Profit and Loss Account

A. Format of the Balance Sheet and Profit and Loss Account

4. In terms of the provisions of Section 29 of the Banking Regulation Act, 1949, a bank shall in respect of all business transacted by it prepare a balance sheet and profit and loss account as on the last working day of the year or the period, as the case may be, in the Forms set out in the Third Schedule of the Banking Regulation Act, 1949. In exercise of the powers conferred by section 29(4) of the Banking Regulation Act, 1949, the Government of India has specified the Forms in the Third Schedule, vide notification S.O.240(E) dated March 26, 1992, published in the Gazette of India. These are reproduced in Annex I to these Directions.

B. Notes and instructions for compilation

5. A bank shall follow the general instructions for the compilation of balance sheet and profit and loss account as specified in subparagraph (1) below. A bank shall ensure strict compliance with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2021, as amended from time to time, subject to Directions / Guidelines issued by the RBI.

Note: Mere mention of an activity, transaction or item in instructions for compilation does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity or transaction.

(1) Instructions for compilation of balance sheet

(2) Instructions for compilation of profit and loss account

C. Guidance on specific issues with respect to certain Accounting Standards

6. A bank shall also be guided by the following with respect to relevant issues in the application of certain Accounting Standards for the bank:

(1) Accounting Standard 5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

(i) The objective of this standard is to prescribe the classification and disclosure of certain items in the statement of profit and loss so that all enterprises prepare and present such a statement on a uniform basis.

(ii) Accordingly, this Standard requires the classification and disclosure of extraordinary and prior period items, and the disclosure of certain items within profit or loss from ordinary activities. It also specifies the accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in accounting policies.

(iii) Paragraph 4.3 of Preface to the Statements on Accounting Standards issued by the ICAI states that Accounting Standards are intended to apply only to items which are material. Since materiality is not objectively defined, it has been decided that all banks should ensure compliance with the provisions of the Accounting Standard in respect of any item of prior period income or prior period expenditure which exceeds one percent of the total income / total expenditure of the bank if the income / expenditure is reckoned on a gross basis or one percent of the net profit before taxes or net losses as the case may be if the income is reckoned net of costs.

(iv) Since the format of the profit and loss accounts of a bank prescribed in Form B under Third Schedule to the Banking Regulation Act, 1949 does not specifically provide for disclosure of the impact of prior period items on the current year’s profit and loss, such disclosures, wherever warranted, may be made in the ‘Notes on Accounts’ to the balance sheet of a bank.

(2) Accounting Standard 9 – Revenue Recognition

(i) Non-recognition of income by the bank in case of non-performing advances and non-performing investments, in compliance with the regulatory prescriptions of the RBI, shall not attract a qualification by the statutory auditors as this would be in conformity with provisions of the standard, as it recognises postponement of recognition of revenue where collectability of the revenue is significantly uncertain.

(3) Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates

AS 11 is applied in the context of the accounting for transactions in foreign currencies. The issues that arise in this context have been identified and a bank shall be guided by the following while complying with the provisions of the standard:

(i) Exchange rate for recording foreign currency transactions

(a) As per paragraphs 9 and 21 of the Standard, a foreign currency transaction shall be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. A bank may face difficulty in applying the exchange rate prevailing at the date of the transaction in respect of the items which are not being recorded in Indian Rupees or are currently being recorded using a notional exchange rate.

(b) A bank, which is in a position to apply the exchange rate prevailing on the date of the transaction for recording the foreign currency transactions as required under AS 11 shall comply with the requirements. A bank, which has an extensive branch network, have a high volume of foreign currency transactions and is not fully equipped on the technology front shall be guided by the following:

(i) Paragraph 10 of the Standard allows, for practical reasons, the use of a rate that approximates the actual rate at the date of the transaction The Standard also states that if exchange rates fluctuate significantly, the use of average rate for a period is unreliable. Since the enterprises are required to record the transactions at the date of the occurrence thereof, the weekly average closing rate of the preceding week can be used for recording the transactions occurring in the relevant week, if the same approximates the actual rate at the date of the transaction. In view of the practical difficulties which a bank may have in applying the exchange rates at the dates of the transactions and since the Standard allows the use of a rate that approximates the actual rate at the date of the transaction, the bank may use average rates as detailed below:

(ii) FEDAI publishes a weekly average closing rate at the end of each week and a quarterly average closing rate at the end of each quarter for various currencies.

(iii) If the weekly average closing rate of the preceding week does not approximate the actual rate at the date of the transaction, the closing rate at the date of the transaction shall be used. For this purpose, the weekly average closing rate of the preceding week would not be considered approximating the actual rate at the date of the transaction if the difference between (A) the weekly average closing rate of the preceding week and (B) the exchange rate prevailing at the date of the transaction, is more than three and a half percent of (B).

(iv) A bank is encouraged to equip itself to record the foreign currency transactions at the exchange rate prevailing on the date of the transaction.

(ii) Closing rate

(a) Paragraph 7 of the Standard defines ‘Closing rate’ as the exchange rate at the balance sheet date.

(b) In order to ensure uniformity among banks, closing rate to be applied for the purposes of AS 11 (revised 2003) for the relevant accounting period would be the last closing spot rate of exchange announced by FEDAI for that accounting period.

(4) Accounting Standard 17 – Segment Reporting

The indicative formats for disclosure under ‘AS 17 – Segment Reporting’ are as below.

Note (2):

a) The business segments will be ‘Treasury’, ‘Retail Banking’ and ‘Other banking operations’.

b) ‘A bank shall adopt their own methods, on a reasonable and consistent basis, for allocation of expenditure among the segments.

c) ‘Treasury’ shall include the entire investment portfolio.

d) Retail Banking shall include exposures which fulfil the four criteria of orientation, product, granularity, and low value of individual exposures for retail exposures laid down in Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025. Individual housing loans will also form part of Retail Banking segment for the purpose of reporting under AS-17.

e) Other Banking Business includes all other banking operations not covered under ‘Treasury, and 'Retail Banking' segments. It shall also include all other residual operations such as para banking transactions / activities.

f) Besides the above-mentioned segments, a bank shall report additional segments within ‘Other Banking Business’ which meet the quantitative criterion prescribed in the AS 17 for identifying reportable segments.

(5) Accounting Standard 18 – Related Party Disclosures

The manner of disclosures required by paragraphs 23 to 26 of AS 18 is illustrated as below. It may be noted that the format given below is merely illustrative in nature and is not exhaustive.

Note:

i) Related parties for a bank are its parent, subsidiary(ies), associates / joint ventures, Key Management Personnel (KMP) and relatives of KMP. KMP are the whole-time directors for an Indian bank. Relatives of KMP would be on the lines indicated in Section 45S of the RBI Act, 1934

ii) The name and nature of related party relationship shall be disclosed, irrespective of whether there have been transactions, where control exists within the meaning of the Standard. Control would normally exist in case of parent-subsidiary relationship. The disclosures may be limited to aggregate for each of the above related party categories and would pertain to the year-end position as also the maximum position during the year.

iii) The Accounting Standards is applicable to all nationalised banks. The accounting standard exempts state-controlled enterprises i.e., nationalised banks from making any disclosures pertaining to their transactions with other related parties which are also state controlled enterprises. Thus, a nationalised bank need not disclose its transactions with the subsidiaries as well as the RRBs sponsored by it. However, it shall be required to disclose its transactions with other related parties.

iv) Secrecy provisions: If in any of the above category of related parties there is only one related party entity, any disclosure would tantamount to infringement of customer confidentiality. In terms of AS 18, the disclosure requirements do not apply in circumstances when providing such disclosures would conflict with the reporting enterprise’s duties of confidentiality as specifically required in terms of statute, by regulator or similar competent authority. Further, in case a statute or regulator governing an enterprise prohibits the enterprise from disclosing certain information, which is required to be disclosed, non-disclosure of such information would not be deemed as non-compliance with the Accounting Standards. On account of the judicially recognised common law duty of a bank to maintain the confidentiality of the customer details, it need not make such disclosures. In view of the above, where the disclosures under the Accounting Standards are not aggregated disclosures in respect of any category of related party i.e., where there is only one entity in any category of related party, a bank need not disclose any details pertaining to that related party other than the relationship with that related party.

(6) Accounting Standard 24 - Discontinuing operations

(i) This Standard establishes principles for reporting information about discontinuing operations.

(ii) Merger / closure of branches of a bank by transferring the assets / liabilities to the other branches of the same bank may not be deemed as a discontinuing operation and hence this Accounting Standard will not be applicable to merger / closure of branches of a bank by transferring the assets / liabilities to the other branches of the same bank.

(iii) Disclosures shall be required under the Standard only when: (a) discontinuing of the operation has resulted in shedding of liability and realisation of the assets by the bank or decision to discontinue an operation which will have the above effect has been finalised by the bank and (b) the discontinued operation is substantial in its entirety.

(7) Accounting Standard 25 – Interim Financial Reporting

(i) This Standard prescribes the minimum content of an interim financial report and the principles for recognition and measurement in a complete or condensed financial statements for an interim period.

(ii) The disclosures required to be made by listed banks in terms of the listing agreements would not tantamount to interim reporting as envisaged under AS 25 and as such AS 25 is not mandatory for the quarterly reporting prescribed for listed banks.

(iii) The recognition and measurement principles laid down under AS 25 shall however, be complied with in respect of such quarterly reports.

(8) Accounting Standard 26 – Intangible asset

(i) This Standard prescribes the accounting treatment for intangible assets that are not dealt with specifically in another accounting standard.

(ii) With respect to computer software which has been customised for the bank’s use and is expected to be in use for some time, the detailed recognition and amortisation principle in respect of computer software prescribed in the Standard adequately addresses these issues and may be followed by banks.

(iii) It may be noted that intangible assets recognised and carried in the balance sheet of a bank in compliance with AS 26 shall attract provisions of section 15(1) of the Banking Regulation Act 1949, in terms of which a bank is prohibited from declaring any dividend until any expenditure not represented by tangible assets is carried in the balance sheet.

(iv) A bank desirous of paying dividend while carrying any intangible assets in its books must seek exemption from section 15(1) of the Banking Regulation Act, 1949 from the Central Government.

(9) Accounting Standard 28 – Impairment of assets

(i) This standard prescribes the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount.

(ii) It is clarified that the standard shall not apply to inventories, investments and other financial assets such as loans and advances and shall generally be applicable to a bank in so far as it relates to fixed assets.

(iii) The Standard shall generally apply to financial lease assets and non-banking assets acquired in settlement of claims only when the indications of impairment of the entity are evident.

Chapter III - Disclosure in Financial Statements – Notes to Accounts

7. A bank shall disclose information as specified in this chapter in the notes to accounts of the financial statements.

Explanation 1: These disclosures are intended only to supplement and not to replace disclosure requirements under other laws, regulations, or accounting and financial reporting standards.

Explanation 2: A bank is encouraged to make disclosures that are more comprehensive than the minimum required under these Directions, especially if such disclosures significantly aid in the understanding of the financial position and performance.

A. General

8. The items listed in these Directions shall be disclosed in the ‘Notes to Accounts’ to the financial statements. A bank shall make additional disclosures where material.

B. Presentation

9. In addition to the schedules to the balance sheet, a summary of ‘significant accounting policies’ and ‘notes to accounts’ shall be disclosed as separate Schedules.

C. Disclosure requirements

10. A bank shall, at the minimum, furnish the following information in the ‘notes to accounts’. The bank shall note that mere mention of an activity, transaction or item in the disclosure template does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity or transaction. The bank shall disclose comparative information in respect of the previous period for all amounts reported in the current period’s financial statements. Further, the bank shall include comparative information for narrative and descriptive information if it is relevant to understanding the current period’s financial statements.

(1) Regulatory capital

(i) Composition of regulatory capital

(ii) Draw down from Reserves: Suitable disclosures mentioning the amount and the rationale for withdrawal shall be made regarding any draw down from reserves.

(2) Asset liability management

(i) Maturity pattern of certain items of assets and liabilities

(3) Investments

(i) Composition of investment portfolio

(ii) Fair value hierarchy of investment portfolio measured at fair value on balance sheet

(iii) Net gains / (losses) on Level 3 financial instruments recognised in AFS-Reserve and Profit and Loss Account

Note: This disclosure shall exclude Level 3 assets where the valuation of the asset is the price declared by FBIL / FIMMDA for that asset.

(iv) Details of sales made out of HTM

Details of sales made out of HTM shall be disclosed in the notes to accounts of the financial statements as per the format mentioned below.

(v) Movement of provisions for non-performing investments (NPIs) and investment fluctuation reserve

(vi) Non-SLR investment portfolio

(a) Non-performing non-SLR investments

(b) Issuer composition of non-SLR investments

Note:

1. For a bank, the Total under column 3 shall match with the sum of total of Investments included under the following categories in Schedule 8 to the balance sheet:

a) Investment in India in

i) Shares

ii) Debentures and Bonds

a. Subsidiaries and /or Joint Ventures

b. Others

b) Investment outside India in (where applicable)

i) Government securities (including local authorities)

ii) Subsidiaries and / or joint ventures abroad

iii) Other investments

2. Amounts reported under columns 4, 5, 6 and 7 above may not be mutually exclusive.

(vii) Repo transactions (in face value and market value terms)

Note:

(i) ‘FV’ means Face Value and ‘MV’ means Market Value.

(ii) The disclosure shall be as specified in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time. For ease of reference the disclosure template as on the date of issuance of this Master Direction has been reproduced here.

Government Security Lending (GSL) transactions (in market value terms)

As at … (current year balance sheet date)

As at … (previous year balance sheet date)

Note: The disclosure shall be as specified in Reserve Bank of India (Government Securities Lending) Directions, 2023, as amended from time to time. For ease of reference the disclosure template as on the date of issuance of this Direction has been reproduced here.

(4) Asset quality

(i) Fraud accounts: A bank shall make disclose details on the number and amount of frauds as well as the provisioning thereon as per template given below.

(5) Exposures

(i) Exposure to capital market

(ii) Risk category-wise country exposure

Note: If a bank has no exposure to country risk in both the current and previous year, it may omit disclosure of the table while mentioning that it has no exposure to country risk.

(6) Derivatives

(i) Details of derivative portfolio

(ii) Forward rate agreement / Interest rate swap

Note: Nature and terms of the swaps including information on credit and market risk and the accounting policies adopted for recording the swaps shall also be disclosed.

(iii) Exchange traded interest rate derivatives

(iv) Disclosures on risk exposure in derivatives

(a) Qualitative disclosures: A bank shall disclose its risk management policies pertaining to derivatives with particular reference to the extent to which derivatives are used, the associated risks and business purposes served. The disclosure shall also include:

(i) the structure and organisation for management of risk in derivatives trading,

(ii) the scope and nature of risk measurement, risk reporting and risk monitoring systems,

(iii) policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges / mitigants, and

(iv) accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.

(b) Quantitative disclosures

[1] The net position shall be shown either under asset or liability, as the case may be, for each type of derivatives.

(7) Transfers to Depositor Education and Awareness Fund (DEA Fund)

(8) Disclosure of complaints

(i) Summary information on complaints received by a bank from customers and from the Offices of Ombudsman (previously office of banking ombudsman)

(ii) Top five grounds of complaints received by the bank from customers

Note - As per Master List for identifying grounds of complaints as provided in Appendix 1 to circular CEPD.CO.PRD.Cir.No.01/13.01.013/2020-21 dated January 27, 2021 on ‘Strengthening the Grievance Redress Mechanism of Banks’.

(9) Disclosure of penalties imposed by the RBI

(i) Penalties imposed by the RBI under the provisions of the (a) Banking Regulation Act, 1949, (b) Payment and Settlement Systems Act, 2007 and (iii) Government Securities Act, 2006 (for bouncing of SGL) shall be disclosed in the ‘Notes to Accounts’ to the balance sheet in the concerned bank’s next Annual Report.

(ii) A bank shall make appropriate disclosures on the nature of the breach, number of instances of default and the quantum of penalty imposed.

(iii) The defaulting participant in a reverse repo transaction shall make appropriate disclosure on the number of instances of default as well as the quantum of penalty paid to the RBI during the financial year.

(10) Disclosures on remuneration

(i) A bank is required to make disclosure on remuneration of Whole Time Directors / Chief Executive Officers / Material Risk Takers on an annual basis at the minimum, in its Annual Financial Statements.

(ii) The bank shall make the disclosures in table or chart format and make disclosures for previous as well as the current reporting year.

(iii) Further, a bank (to the extent applicable), shall disclose the following information:

(iv) A bank shall also disclose remuneration paid to the non-executive directors on an annual basis at the minimum, in its Annual Financial Statements.

(v) Share-linked instruments should be fair valued on the date of grant by the bank using Black-Scholes model. The fair value thus arrived at should be recognised as an expense beginning with the accounting period for which approval has been granted.

11 Other Disclosures

(i) Business ratios

¹ Working funds to be reckoned as average of total assets (excluding accumulated losses, if any) as reported to RBI in Form X for Commercial Banks and Form IX for Co-operative Banks, during the 12 months of the financial year.

² Net Interest Margin = Net Interest Income / Average Earning Assets Where Net Interest Income= Interest Income – Interest Expense.

³ Return on Assets would be with reference to average working funds (i.e., total of assets excluding accumulated losses, if any).

⁴ For the purpose of computation of business per employee (deposits plus advances), inter-bank deposits shall be excluded.

(ii) Bancassurance business: The details of fees / brokerage earned in respect of insurance broking, agency and bancassurance business undertaken by a bank shall be disclosed for both the current year and previous year.

(iii) Marketing and distribution: A bank shall disclose the details of fees / remuneration received in respect of the marketing and distribution function (excluding bancassurance business) undertaken by it.

(iv) Provisions and contingencies

(v) Implementation of IFRS converged Indian Accounting Standards (Ind AS)

(a) As the legislative amendments recommended by the RBI are under consideration of the Government of India, implementation of Indian Accounting Standards (Ind AS) for banks has been deferred till further notice.

(b) However, a bank shall continue to disclose the strategy for Ind AS implementation, including the progress made in this regard. These disclosures shall be made until implementation of Ind AS.

(vi) Payment of DICGC Insurance Premium

Chapter IV - Other Instructions

A. Inter-branch account - provisioning for net debit balance

11. A bank shall adhere to following guidelines for unreconciled inter-branch account entries.

(1) The bank shall segregate the credit entries outstanding for more than five years in the inter-branch account and transfer them to a separate ‘Blocked Account’ which shall be shown under ‘Other Liabilities and Provisions - Others’.

(2) Any adjustment from the Blocked Account should be permitted only with the authorisation of two officials, one of whom should be from the Controlling / Head Office if the amount exceeds Rupees One lakh.

(3) The balance in Blocked Account shall be reckoned as a liability for the purpose of the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

(4) The bank shall maintain category-wise (head-wise) accounts for various types of transactions put through inter-branch accounts, so that the netting can be done category-wise. As on the balance sheet date, the bank shall segregate the debit and credit entries remaining unreconciled for more than six months and arrive at the net position category-wise, while also considering the balance in the Blocked Account.

(5) The net debit under all the categories of inter-branch accounts shall be aggregated and a provision equivalent to 100 percent of the aggregate net debit shall be made.

Provided that, the bank shall ensure that the net debit in one category is not set-off against net credit in another category.

B. Reconciliation of Nostro account and treatment of outstanding entries

12. Treatment of outstanding entries in Nostro accounts shall of a bank shall be as under.

(1) The bank shall take steps to have a strong control over reconciliation and put in place a system of real-time reconciliation, which provides for immediate escalation of differences, if any.

(2) There shall be close monitoring of pending items in Nostro accounts by top management at short intervals.

(3) All unreconciled credit entries in Nostro accounts which are outstanding for more than three years shall be transferred to a Blocked Account and shown as outstanding liabilities.

(4) The balance in the Blocked Account shall be reckoned for the purpose of CRR / SLR.

(5) A bank shall make 100 percent provision in respect of all unreconciled debit entries in the Nostro accounts, which are outstanding for more than two years.

(6) A bank which, in the past, was permitted to transfer to profit and loss account (followed by subsequent appropriation to general reserve) outstanding credit entries of individual value less than USD 2,500 or equivalent in Nostro accounts originated up to March 31, 2002, subject to certain conditions, shall ensure that any future claims in respect of these entries are honoured.

Explanation: The amount appropriated to the general reserve shall not be available for the declaration of dividend.

C. Transfer to / appropriation from Reserve funds

13. In terms of section 17(1) of the Banking Regulation Act, 1949 a bank is required to transfer, out of the balance of profit as disclosed in the profit and loss account, a sum equivalent to not less than 20 percent of such profit to Reserve Fund. These provisions are a minimum statutory requirement. However, to augment capital, a bank shall transfer not less than 25 percent of the ‘net profit’ before appropriations to the Statutory Reserve.

14. Unless specifically allowed by extant regulations, the bank shall take prior approval from the RBI before any appropriation is made from the Statutory Reserve or any other reserve.

15. Banks are further advised that,

(1) all expenses including provisions and write-offs recognised in a period, whether mandatory or prudential, shall be reflected in the profit and loss account for the period as an ‘above the line’ item (i.e., before arriving at the net profit / loss for the year);

(2) draw down from reserves, with the prior approval of RBI, shall be effected only ‘below the line’ (i.e. after arriving at the net profit / loss for the year); and

(3) suitable disclosures shall be made of such draw down in the ‘Notes on Accounts’ to the Balance Sheet.

(4) Subject to compliance with applicable laws, banks, without prior approval of RBI, can utilise the share premium account for meeting issue expenses of shares to the extent that such expenses are incremental costs directly attributable to the transaction that otherwise would have been avoided.

Provided that, the share premium account shall not be utilised for writing off the expenses relating to the issue of debt instruments.

Explanation: For the purposes of this Direction, issue expenses shall include registration and other regulatory fees, payments made to legal, accounting, and other professional advisers, printing costs, and stamp duties.

D. Provisioning for fraud

16. In respect of provisioning for frauds, a bank that has reported the fraud within the prescribed time shall have the option to make the provision for the same over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.

17. Where the bank chooses to provide for the fraud over two to four quarters and this results in the full provisioning being made in more than one financial year, subject to compliance with applicable laws, it may debit reserves other than the Statutory Reserve by the amount remaining un-provided at the end of the financial year by credit to provisions.

Provided that, it should subsequently proportionately reverse the debits to the reserves and complete the provisioning by debiting profit and loss account, in the successive quarters of the next financial year.

18. Where there has been delay, beyond the prescribed period, in reporting the fraud to the RBI, the entire provisioning is required to be made at once.

E. Unreconciled balances

19. Unreconciled credit balances in any transitory account representing unclaimed balances shall not be transferred to the profit and loss account or to any reserves.

F. Deferred tax liability (DTL) on Special Reserve created under Section 36(1) (viii) of the Income Tax Act, 1961

20. A bank shall make provisions for DTL on the Special Reserve created under Section 36(1)(viii) of Income Tax Act, 1961.

G. Window dressing

21. A bank shall ensure that balance sheet and profit and loss account reflects true and fair picture of its financial position.

22. Instances of window dressing of financials, short provisioning, under-reporting / incorrect computation of exposure / risk weight, incorrect capitalisation of expenses, deliberate inflation of asset and liabilities at the end of the financial year and subsequent reversal immediately in next financial year, etc. shall be viewed seriously and appropriate penal action in terms of the provisions of the Banking Regulation Act, 1949 shall be considered.

Chapter V - Repeal and Other Provisions

A. Repeal and saving

23. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to Financial Statements- Presentation and Disclosures as applicable to Payments Banks stand repealed, as communicated vide notification dated XX, 2025. The directions, instructions, and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed.

24. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions.

B. Application of other laws not barred

25. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations or directions, for the time being in force.

C. Interpretations

26. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the RBI may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the RBI shall be final and binding.