RBI Removes Rules for Deferring Option Premiums for Banks
Starting April 1, 2027, banks can no longer use the option premium deferment method for their financial reporting.
- Document
- Notifications
- Dated
- 07 Oct 2026
- Effective
- April 1, 2027
- Act by
- April 1, 2027
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The Reserve Bank of India deleted Paragraph 38 regarding option premium deferment.
- This change applies to all commercial banks operating in India.
- New rules take effect starting from April 1, 2027.
In short
This document from the Reserve Bank of India (RBI) removes a specific accounting rule that allowed banks to delay the recognition of option premiums.
What has changed
How it worked before
Previously, banks were permitted to defer (postpone) the accounting of option premiums under specific guidelines in the 2025 Directions.
What has changed
The RBI has completely deleted the section that allowed this deferment, meaning banks must now follow standard accounting practices for these premiums.
Who this affects
This change applies only to commercial banks in India that manage miscellaneous financial operations.
What you should do
If you run a commercial bank, you must update your internal accounting policies and operational guidelines to remove the option premium deferment process before the April 2027 deadline.
Deadline · April 1, 2027If you do nothing
Failure to comply with these directions may lead to regulatory scrutiny or penalties under the Banking Regulation Act, 1949, which gives the RBI power to oversee bank operations.
The terms explained
- Option premium
- The price paid to buy the right to trade a financial asset at a set price.
- Deferment
- The act of putting off or delaying an action to a later time.
- Commercial banks
- Financial institutions that provide services like accepting deposits and offering loans to the public.
The original document
| Issued by | RBI |
|---|---|
| Document | Notifications |
| Full title | Reserve Bank of India (Commercial Banks – Miscellaneous) Amendment Directions, 2026 |
| Issued on | 07 October 2026 |
| Effective | April 1, 2027 |
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