RBI issues an amendment to the prudential capital-adequacy framework applicable to specified NBFCs,

RBI issues an amendment to the prudential capital-adequacy framework applicable to specified NBFCs, revising the risk weights applicable to loans satisfying the prescribed conditions for “high-quality infrastructure projects”.

An NBFC adopts the amended directions from 1 January 2026, although the directions provide that they are applicable from 1 April 2026 or from an earlier date where adopted by an NBFC in entirety.

The CFO states:

“Since the statutory effective date is 1 April 2026, the auditor must ignore the amended risk weights while auditing the financial statements for the year ended 31 March 2026, even though the NBFC adopted the directions from 1 January 2026.”

Which ONE of the following is most appropriate?

A. The CFO is correct because an amendment having a stated effective date cannot be applied to a reporting period ending before that date.

B. The CFO is incorrect because an earlier adoption mechanism specifically permits the amended directions to become applicable from the date of adoption where the prescribed conditions are satisfied.

C. The CFO is correct because prudential amendments can be considered only after they become mandatory for every NBFC within the relevant regulatory layer.

D. The CFO is incorrect only if the auditor establishes that the revised risk weight produces a lower provision than the earlier framework.