RBI (Commercial Banks – Asset Liability Management) Second Amendment Directions, 2026

Executive Summary

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Asset Liability Management) Second Amendment Directions, 2026, dated 30 July 2026, to align the disclosure requirements under the Asset Liability Management (ALM) Directions, 2025 with the revised Basel Pillar 3 disclosure framework introduced through the Prudential Norms on Capital Adequacy) Seventh Amendment Directions, 2026. The amendments primarily update the cross-references for the disclosure of the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), ensuring consistency across RBI's prudential and disclosure frameworks. The Directions will come into force from 1 April 2027.

Background

The RBI reviewed the existing Commercial Banks – Asset Liability Management Directions, 2025 following the introduction of the revised Basel Pillar 3 disclosure framework. To eliminate duplication and ensure uniformity in regulatory reporting, the RBI has amended the ALM Directions so that banks refer to the disclosure requirements prescribed in the relevant Financial Statements and Capital Adequacy Directions rather than maintaining separate disclosure formats within the ALM framework.

Key Amendments

1. Revision of LCR Disclosure Requirements

The amendment substitutes Paragraph 204 of the ALM Directions. Banks are now required to refer to the disclosure templates and related instructions prescribed under:

• Reserve Bank of India (Commercial Banks – Financial Statements: Presentation and Disclosures) Directions, 2025; and
• Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025

for disclosures relating to the Liquidity Coverage Ratio (LCR).

2. Revision of NSFR Disclosure Requirements

Similarly, Paragraph 250 has been substituted to require banks to follow the disclosure templates and instructions contained in the above Directions for disclosures relating to the Net Stable Funding Ratio (NSFR).

3. Effective Date

The amended provisions will become effective from 1 April 2027, providing banks sufficient time to align their disclosure frameworks, reporting systems and internal controls with the revised requirements.

Regulatory Significance

Although the amendments are procedural rather than substantive, they are important from a governance and disclosure perspective. By consolidating disclosure requirements under the Financial Statements and Basel Pillar 3 Directions, RBI has promoted:

• consistency in regulatory reporting;
• harmonisation of liquidity disclosures;
• reduced duplication across regulatory frameworks; and
• improved comparability of disclosures among banks.

The amendments are part of RBI's broader effort to streamline prudential regulation while aligning Indian banking disclosures with internationally accepted Basel standards.

Compliance Implications

Banks should undertake the following actions before 1 April 2027:

• Review ALM policies and disclosure manuals.
• Update internal reporting templates for LCR and NSFR disclosures.
• Align disclosure processes with the revised Financial Statements and Basel Pillar 3 Directions.
• Modify reporting systems and compliance checklists to reflect the revised cross-references.
• Train finance, treasury, risk management and compliance teams on the updated disclosure framework.

Overall Assessment

The Asset Liability Management Second Amendment Directions, 2026 represent a targeted but important refinement of RBI's regulatory architecture. Rather than introducing new liquidity norms, the amendments rationalise the disclosure framework by directing banks to a single, harmonised source for LCR and NSFR disclosures.

By integrating the ALM Directions with the revised Basel Pillar 3 disclosure regime, RBI has reinforced consistency, transparency and regulatory coherence in liquidity reporting. While the operational impact is expected to be modest, banks should use the transition period to update their governance processes, reporting systems and disclosure practices ahead of the 1 April 2027 implementation date.