RBI proposes banks to disclose detailed information on capital, risks under Basel Pillar 3
The central bank said banks should make quarterly disclosures in a single format covering key prudential metrics such as 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 the draft circular on Block 3’s disclosure requirements, banks will also need to disclose significant changes in these metrics from previous quarters and the key drivers behind such movements.
The Reserve Bank of India (RBI) has sought comments on the draft circular by June 2 and also announced that the final instructions will come into force from the quarter ending September 30, 2026.
RBI recommends disclosures that explain a bank’s main activities and all its material risks, supported by relevant key data and information.
Significant changes in risk exposure between reporting periods should be disclosed, together with the appropriate response from management.
Banks are expected to provide adequate information, both qualitatively and quantitatively, about their processes and procedures for identifying, measuring and managing these risks, an RBI statement said. According to the draft circular, banks are required to have a ‘Regulatory Disclosure Section’ on their websites where all information regarding disclosures will be made available to market participants. In addition, banks must make available on their websites an archive of Pillar 3 reports for past reporting periods of at least ten years.
A bank must publish Pillar 3 disclosures simultaneously with its financial reports for the relevant period. The RBI said that if Block 3 disclosure is required for a period during which a bank has not filed any financial reports, the disclosure requirement will be issued as soon as possible.
However, the draft circular also introduced some exceptions; For example, if a bank considers that the information requested in a template or table would not be meaningful to users, it may choose not to disclose some or all of the requested information, for example because risks and risk-weighted asset (RWA) amounts are deemed immaterial. The bank must explain in an explanatory comment why it thinks such information is not meaningful to users.
