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Date: 01/07/2010
Master Circular - Disclosure Norms for Financial Institutions

DBOD. No. FID. FIC.2 /01.02.00/2010-11

 01 July, 2010
10 Aashadha 1932 (Saka)

The CEOs of the All-India Term-lending and Refinancing Institutions
(Exim Bank, NABARD, NHB and SIDBI)

Dear Sir,

Master Circular - Disclosure Norms for Financial Institutions

Please refer to the Master Circular DBOD No.FID.FIC.2 /01.02.00/2009-10 dated July 01, 2009 on the above subject. The enclosed Master Circular consolidates and updates all the instructions/ guidelines on the subject up to June 30, 2010. The Master Circular has also been placed on the web-site of RBI (

2. It may be noted that the instructions contained in the Annex 4 have been consolidated in this master circular.

Yours faithfully,

(Vinay Baijal)
Chief General Manager

Encls : As above

Master Circular – Disclosures in Financial Statements of
Financial Institutions – Notes to Accounts


To provide a detailed guidance to all-India term-lending and refinancing institutions in the matter of disclosures in the ‘Notes to Accounts’ to the Financial Statements.

Previous instructions

This master circular consolidates and updates the instructions on the above subject contained in the circulars listed in the Annex 4.


To all the all India Financial Institutions viz. Exim Bank, NABARD, NHB and SIDBI.


1 Introduction 
2 Guidelines on disclosure requirements




Asset quality and credit concentration




Operating results


Movement in the provisions


Restructured Accounts


Assets Sold to Securitisation Company/Reconstruction Company


Forward Rate Agreements and Interest Rate Swaps


Interest Rate Derivatives


Investments in Non Government Debt Securities


Consolidated Financial Statements


Extent of Consolidation


Accounting Policies


Risk in Derivatives


Exposures where the FI had exceeded the prudential exposure limits during the year


Corporate Debt Restructuring (CDR)


Additional Disclosures in Notes to Accounts




The CRAR and other parameters


The Asset Quality and Credit Concentration


The Credit Exposure


Capital Funds


The definition of borrower group


The Maturity Pattern of Assets and Liabilities


Operating Results


Computing per employee net profit


Annex – 1 Format for disclosure of Issuer composition for Investment in Debt Securities


Annex – 2


Disclosure on risk exposure in derivatives:


Qualitative Disclosure


Quantitative Disclosure


Annex - 3 Additional Disclosures


Annex - 4 List of Circulars

1 Introduction

Recognising considerable divergence amongst the financial institutions in the nature and manner of disclosures made by them in their published financial statements the disclosure norms were introduced by Reserve Bank of India for the financial institutions in March 2001 with a view to bringing about uniformity in the disclosure practices adopted by them and improving the degree of transparency in their affairs.  Such disclosures, which came into effect from the financial year 2000-2001 and were subsequently enhanced, are required to be made as part of the "Notes to Accounts" to enable the auditors to authenticate the information and notwithstanding the fact that the same information might be contained elsewhere in the published financial statements. These disclosures constitute only minima and if an FI desires to make any additional disclosures, it would be well advised to do so.

2 Guidelines on Disclosure requirements

The various disclosure requirements are as under:

2.1 Capital

(a) CRAR,  core CRAR and supplementary CRAR

(b) The amount of subordinated debt raised and outstanding as Tier–II capital

(c) Risk weighted assets –  separately for on- and off-balance sheet items

(d) The share holding pattern as on the date of the balance sheet

2.2 Asset quality and credit concentration

(e) Percentage of net NPAs to net loans and advances

(f) Amount and percentage of net NPAs under the prescribed asset classification categories

(g) Amount of provisions made during the year towards Standard assets,  NPAs, investments (other than those in the nature of an advance), income tax

(h) Movement in net NPAs

(i)  Credit exposure as percentage to capital funds  and as percentage to total assets, in respect of:

  • The largest single borrower;
  • The largest borrower group;
  • The 10 largest single borrowers
  • The 10 largest borrower groups;

(Names of the borrowers / borrower groups need not be disclosed).

(j) Credit exposure to the five largest industrial sectors (if applicable) as percentage to total loan assets

2.3 Liquidity

(k) Maturity pattern of rupee assets and liabilities; and    
(l) Maturity pattern of foreign currency assets and liabilities,in the following format:


Less than or equal to 1 year

More than a year up to 3 years

More than 3 years up to 5 years

More than 5 years up to 7 years

More than 7 years


Rupee assets







Foreign currency assets







Total assets







Rupee liabilities







Foreign currency liabilities







Total liabilities














2.4 Operating results

(m) Interest income as a percentage to average working funds

(n) Non-interest income as a percentage to average working funds

(o) Operating profit as a percentage to average working funds

(p) Return on average assets

(q)   Net Profit per employee

2.5 Movement in the provisions

The movement in the provisions held towards Non Performing Assets and depreciation in investment portfolio should be disclosed as per the following format:

I. Provisions for Non Performing Assets (comprising loans, bonds and debentures in the nature of advance and inter-corporate deposits)
(excluding provision for standard assets)
a) Opening balance as at the beginning of the financial year

Add: Provisions made during the year

Less:  Write off, write back of excess provision
b) Closing balance at the close of the financial year

II. Provisions for depreciation in investments

c) Opening balance as at the beginning of the financial year


i.Provisions made during the year

ii.Appropriation, if any, from Investment Fluctuation Reserve Account during the year


i.Write off during the year

ii.Transfer, if any, to Investment Fluctuation Reserve Account

d) Closing balance as at the close of the financial year

2.6 Restructured Accounts

The total amount of loan assets as also of the sub standard assets/ doubtful assets separately, which have been subjected to restructuring, etc should be disclosed.

2.7 Assets Sold to Securitisation Company/ Reconstruction Company

FIs which sell their financial assets to an SC/ RC, shall be required to make the following diclosures :

a) Number of Accounts
b) Aggregate value (net of provisions) of accounts sold to SC /RC
c) Aggregate consideration
d) Additional consideration realised in respect of accounts transferred in earlier years
e) Aggregate gain / loss over net book value.

2.8 Forward Rate Agreements and Interest Rate Swaps

The following disclosures should be made in the note to the balance sheet:

  • The notional principal of swap agreements;
  • Nature and terms of the swaps including information on credit and market risk and the accounting policies adopted for recording the swaps;
  • Quantification of the losses which would be incurred if the counter parties failed to fulfil their obligations under the agreements;
  • Collateral required by the entity upon entering into swaps;

  • Any concentration of credit risk arising from the swaps. Examples of concentration could be exposures to particular industries or swaps with highly geared companies; and

  • The "fair" value of the total swaps book. If the swaps are linked to specific assets, liabilities or commitments, the fair value would be the estimated amount that the entity would receive or pay to terminate the swap agreements at balance sheet date. For a trading swap, the fair value would be its mark to market value.

2.9 Interest Rate Derivatives

The FIs dealing in interest rate derivatives on exchanges should disclose as a part of the 'notes on accounts' to balance sheets the following details:





Notional principal amount of exchange traded interest rate derivatives undertaken during the year (instrument-wise)



Notional principal amount of exchange traded interest rate derivatives outstanding as on 31st March ____ (instrument-wise)



Notional principal amount of exchange traded interest rate derivatives outstanding and not “highly effective” (instrument-wise)



Mark-to-market value of exchange traded interest rate derivatives outstanding and not “highly effective” (instrument-wise)


2.10 Investments in Non Government Debt Securities:

The FIs should disclose the details of the issuer composition of investments made through private placement and the non-performing investments in the ‘Notes on Accounts’ of the balance sheet in the format furnished in the Annex 1.

2.11 Consolidated Financial Statements (CFS)

2.11.1 Extent of Consolidation:

A parent, presenting the CFS, should consolidate the financial statements of all subsidiaries – domestic as well as foreign, except those specifically permitted to be excluded under the AS-21 the ICAI. The reasons for not consolidating a subsidiary should be disclosed in the CFS. The responsibility of determining whether a particular entity should be included or not for consolidation would be that of the Management of the parent entity. In case, its Statutory Auditors are of the opinion that an entity, which ought to have been consolidated, has been omitted, they should incorporate their comments in this regard in the "Notes to Account".

2.11.2 Accounting Policies:

CFS should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. (For the purpose, the FIs should rely on a Statement of Adjustments for non-uniform accounting policies furnished by the statutory auditors of the subsidiaries.) If it is not practicable to do so, that fact should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have been applied.

2.12 Disclosures  on Risk Exposures in Derivatives

Best international practices require meaningful and appropriate disclosures of FIs' exposures to risk and their strategy towards managing the risk. FIs should make meaningful disclosures of their derivatives portfolio.  A minimum framework for disclosures by FIs on their risk exposures in derivatives is furnished in Annex 2. The disclosure format includes both qualitative and quantitative aspects and has been devised to provide a clear picture of the exposure to risks in derivatives, risk management systems, objectives and policies. FIs should make these disclosures as a part of the 'Notes on Accounts' to the Balance Sheet with effect from March 31, 2005 (June 30, 2005 in the case of National Housing Bank).

2.13 Exposures where the FI had exceeded the prudential exposure limits during the year

The FI should make appropriate disclosures in the ‘Notes on account’ to the annual  financial statements in respect of the exposures where the FI had exceeded the prudential exposure limits during the year.

2.14  Corporate Debt Restructuring (CDR)

FIs should also disclose in their published Annual Accounts, under the "Notes on Accounts", the following information in respect of CDR undertaken during the year :

  • Total amount of loan assets subjected to restructuring under CDR
  • The amount of standard assets subjected to CDR.
  • The amount of sub-standard assets subjected to CDR.

2.15  Additional Disclosures by FIs in Notes to Accounts

Reserve Bank has been taking several steps from time to time to enhance the transparency in the operations of banks by stipulating comprehensive disclosures in tune with the international best practices.

On a review of the existing disclosures, it has been decided to prescribe the following additional disclosures in the ‘Notes to Accounts’ in the FIs’ balance sheets, from the year ending March/June 2010:

i) Concentration of Deposits, Advances, Exposures   and  NPAs

ii) Sector-wise NPAs

iii) Movement of NPAs (For calculation of gross NPA, please refer to circular DBOD No. FID.FIC.9/01.02.00/2009-10 dated 26.03.2010)  

iv) Overseas assets, NPAs and revenue

v) Off-balance sheet SPVs sponsored by banks The prescribed formats are furnished in Annex 3.


i) The CRAR and other parameters

The CRAR and other related parameters, determined as per the extant capital adequacy norms for the FIs, should be disclosed.

ii) The Asset quality and credit concentration

For the purpose of asset quality and credit concentration, the following  should also be reckoned for determining the amount of loans and advances and the NPAs and included in the disclosures: 

    (i) Bonds and Debentures : The bonds and debentures should be treated in the nature of advance when :

    • The debenture / bond is issued as part of the proposal for project finance and the tenor of the bond / debenture is for three years and above.


    • The FI has a significant stake (i.e. 10% or more) in the issue.


    • The issue is a part of private placement i.e. the borrower has approached the FI, and not part of a public issue where the FI has subscribed in response to an invitation.

    (ii) Preference Shares : The preference shares, other than convertible preference shares, acquired as part of project financing and meeting the criteria as at (i) above.

    (iii) Deposits : The deposits placed with the corporate sector.

(iii) The Credit Exposure
The   “credit   exposure” shall   include funded    and   non-funded   credit limits, underwriting and other similar commitments. The sanctioned limits or outstandings whichever is higher shall be reckoned for arriving at exposure limit. In case of term loans, however the exposure limit should be reckoned on the basis of actual outstandings plus undisbursed or undrawn commitments.

However, in cases where disbursements are yet to commence, exposure limit should be reckoned on the basis of the sanctioned limit or the extent upto which the FI has entered into commitments with the borrowing companies in terms of the agreement. 

FIs should include in the non-funded credit limit, the forward contracts in foreign exchange and other derivative products like currency swaps, options, etc as per the extant exposure norms.

(IV) Capital Funds

Capital funds for the purpose of credit concentration, would be the total regulatory capital as defined under capital adequacy standards ( i.e.Tier I and Tier II Capital ).

(V) The definition of Borrower Group

The definition of ' borrower group' would be the same as applied by the FIs in complying with group exposure norms.

(VI) The maturity pattern of Assets and Liabilities
For the maturity pattern of  assets and  liabilities,  the  bucketing of various items of assets and liabilities in the specified time buckets should be done in accordance with the RBI Guidelines on Asset Liability Management System, issued to FIs.

(VII) Operating results

For operating results, the working funds and total assets should be taken as the average of the figures as at the end of the previous accounting year, the end of the succeeding half year and the end of the accounting year under report. (The “working funds” refer to the total assets of the FI.)

(VIII) Computing per employee net profit

All permanent, full-time employees in all cadres should be reckoned for computing per employee net profit. 

Annex 1

Format For Disclosure Of Issuer Composition For Investment In Debt Securities

A.      Issuer categories in respect of investments made
          (As on the date of the balance sheet)

(Rs. in crore)

Sr. No.




Amount of

invest-ment made through private place-ment

‘below invest-ment grade’
Securities held

Securities held































Private corporates







Subsidiaries/ Joint ventures














# Provision held towards depreciation






  Total  *          

#  Only aggregate amount of provision held to be disclosed in column 3.


1. Total under column 3 should tally with the total of investments included under the following categories in the balance sheet:

a. Shares
b. Debentures & Bonds
c. Subsidiaries/ joint ventures
d. Others

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

B. Non performing investments

(Rs. in Crore)



Opening balance


Additions during the year since 1st April


Reductions during the above period


Closing balance


Total provisions held


Annex 2

Disclosures on risk exposure in derivatives

Qualitative Disclosure

FIs shall discuss their 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 discussion shall also include:

  • the structure and organization for management of risk in derivatives trading,
  • the scope and nature of  risk measurement , risk reporting and risk monitoring systems,
  • policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges / mitigants, and
  • 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.

Quantitative Disclosures

(Rs. in Crore)



Currency Derivatives

Interest rate derivatives


Derivatives (Notional Principal Amount)




a) For hedging




b) For trading




Marked to Market Positions[1]




a) Asset (+)




b) Liability (-)




Credit Exposure [2]




Likely impact of one percentage change in interest rate (100*PV01)




a) on hedging derivatives




b) on trading derivatives




Maximum and Minimum of 100*PV01 observed during the year




a) on hedging




b) on trading




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

2. FIs should adopt the Current Exposure Method prescribed by RBI on Measurement of Credit Exposure of Derivative Products which is described in brief as follows:

In order to calculate the credit exposure equivalent of off-balance sheet interest rate and exchange rate instruments under current exposure method, a FI would sum:

  • the total replacement cost (obtained by “marking to market”) of all its contracts with positive value (i.e., when the FI has to receive money from the counterparty), and

  • an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the following credit conversion factors according to the residual maturity  of the contract :

Residual Maturity

Conversion Factor to be applied on Notional Principal Amount

Interest Rate Contract

Exchange Rate Contract

Less than one year 


1.0 %

One year and over


5.0 %

Annex 3

Additional Disclosures
I. Concentration of Deposits, Advances,  Exposures   and  NPAs  
Concentration of Deposits

(Amount in Rupees Crores) 

Total Deposits of twenty largest depositors


Percentage of Deposits of twenty largest depositors to Total Deposits


Concentration of Advances*

(Amount in Rupees Crores) 

Total Advances to twenty largest borrowers


Percentage of Advances of twenty largest borrowers to Total Advances  

*Advances should be computed as per definition of Credit Exposure including derivatives furnished in our Master Circular on Exposure Norms dated July 1, 2010. 

Concentration of Exposures**

(Amount in Rupees Crores)

Total Exposure to twenty largest borrowers/customers


Percentage of Exposures of twenty largest borrowers/customers to Total Exposure on borrowers/customers  

**Exposures should be computed based on credit and investment exposure as prescribed in our Master Circular on Exposure Norms dated July 1, 2010. 

Concentration of NPAs

(Amount in Rupees Crores) 

Total Exposure to top four NPA accounts


II: Sector-wise NPAs

Sl. No


Percentage of NPAs to Total Advances in that sector


Agriculture & allied activities
Industry  (Micro & small, Medium and Large)



Industry  (Micro & small, Medium and Large)






Personal Loans


III.  Movement of NPAs


Amount in Rs. Crores

Gross NPAs* as on 1st April of particular year (Opening Balance)


Additions (Fresh NPAs) during the year


Sub-total (A)




(i)  Upgradations


(ii) Recoveries (excluding recoveries made from upgraded accounts)


iii) Write-offs


Sub-total (B)


Gross NPAs as on 31st March of following year (closing balance) (A-B)  

*Gross NPAs as per item 2 of Annex to DBOD Circular DBOD.FID.FIC.9/01.02.00/2009-10 dated March 26, 2010 

IV. Overseas Assets, NPAs and Revenue


Amount in Rs. Crores

Total Assets


Total NPAs


Total Revenue


V. Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

Name of the SPV sponsore





Annex 4

Part A: List of instructions and circulars superseded


Circular No.




DBS. FID. No. C- 18 / 01.02.00/ 2000-01


Disclosures in the Published Financial statements.


DBS. FID. No. C-14 / 01.02.00/2001-02


Additional Disclosures in the Published Financial statements


DBOD.No.FID. FIC- 1  /01.02.00/ 2004-05


Disclosures on Risk Exposures in Derivatives


DBOD.No.FID. FIC- 2  /01.02.00/ 2006-07


Master Circular - Disclosure Norms for Financial Institutions


DBOD.No.FID. FIC- 2  /01.02.00/ 2007-08


Master Circular - Disclosure Norms for Financial Institutions

Part B: List of other circulars containing Instructions/Guidelines/Directives related to Disclosure Norms


Circular No.




DBS. FID . No. 20 / 02.01.00 / 1997-98


Limits on Credit Exposures of Term Lending Financial Institutions to Individual/  Group Borrowers


MPD. BC. 187 / 07.01.279 / 1999-2000


Forward Rate Agreements / Interest Rate Swaps


DBS. FID. No. C-9 / 01.02.00 /2000-01


Guidelines – Classification and Valuation of Investments


DBS. FID. No. C-19 / 01.02.00/2000-01


Treatment of Restructured Accounts


DBS. FID. No. C-26 / 01.02.00 /2000-01


Monetary and Credit Policy Measures 2001-2002 – Credit Exposure Norms


DBS. FID. No. C-2 / 01.11.00 /2001-02


Corporate Debt Restructuring (CDR)


DBS. FID. No. C-6 / 01.02.00 /2001-02


Guidelines for Classification and Valuation of Investments –Modifications / Clarifications


DBOD No. BP.BC. 96 / 21.04.048/ 2002-2003


Guidelines on Sale of Financial Assets to Securitisation Company/ Reconstruction Company


IDMC. MSRD.  4801 / 06.01.03/2002-03


Guidelines on Exchange Traded Interest Rate Derivatives


DBS. FID. No. C-5 / 01.02.00/2003-04


Guidelines for Consolidated Accounting and Consolidated Supervision


DBS. FID. No. C-11 / 01.02.00/2003-04


Final Guidelines on  investment by the FIs in debt securities


DBOD No.  FID.FIC. 8/ 01.02.00/2009-10


Additional Disclosures in Notes to Accounts


DBOD No.  FID.FIC. 9/ 01.02.00/2009-10


Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Computation of NPA Levels

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