The central bank indicated that banks are required to make quarterly disclosures in a consistent format that covers essential prudential metrics, including Common Equity Tier 1 (CET 1) capital, total capital, risk-weighted assets (RWAs), leverage ratio, liquidity coverage ratio (LCR), and net stable funding ratio (NSFR).
In a draft circular concerning Pillar 3 disclosure requirements, banks will also need to articulate any significant changes in these metrics from prior quarters, explaining the key factors driving such alterations.
The Reserve Bank of India (RBI) has requested feedback on the draft circular by June 2 and stated that the final guidelines will take effect from the quarter ending September 30, 2026.
The RBI suggests that disclosures should outline a bank’s primary activities and all significant risks, backed by pertinent underlying data and information.
Any notable changes in risk exposures between reporting periods should be detailed, along with management’s appropriate responses.
Banks are expected to furnish ample information in both qualitative and quantitative formats regarding their methods and procedures for identifying, measuring, and managing those risks, as per an RBI release.
According to the draft circular, banks are required to maintain a ‘Regulatory Disclosure Section’ on their websites, where all relevant disclosure information will be available to market participants. Additionally, banks must archive Pillar 3 reports pertaining to previous reporting periods on their websites for a minimum of ten years.
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A bank must publish Pillar 3 disclosures simultaneously with its financial reports for the relevant period. If a Pillar 3 disclosure is necessary for a period when a bank does not issue any financial report, the required disclosure should be made available as soon as practicable, the RBI noted.
However, the draft circular also includes certain exceptions, stating that if a bank believes the information requested in a template or table would not be meaningful to users—such as when the exposures and risk-weighted asset (RWA) amounts are considered immaterial—it may opt not to disclose part or all of the requested information. The bank must provide a narrative commentary explaining why it deems such information to be not meaningful to users.
