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RNBC Directed Investments: Clarification on Incremental ALD

Current & verified — this is the latest version
Source: Reserve Bank of India · RBI/2005-06/348 · issued 04 Apr 2006 · ~1 min read
Quick answerRBI corrected a prior circular on RNBC directed investments by removing the phrase 'i.e. incremental ALD' from paragraph 5(c). This ensures the requirement applies to total directed investments, not just incremental additions.
The rule, in the simplest words
How it plays out — a real example

Rahul, a compliance officer at a Residuary Non-Banking Company in Mumbai, reviewed their directed investment portfolio to ensure they met the corrected requirement. He noticed that their total directed investments exceeded the allowed limit and worked with the investment team to adjust their portfolio accordingly. With the clarification, Rahul felt confident that their company was in compliance with RBI regulations.

What changed

RBI issued a clarification to Circular No. 65 dated March 31, 2006, on maintenance of directed investments by RNBCs. The words 'i.e. incremental ALD' in paragraph 5(c) of that circular were omitted to avoid ambiguity.

What it means for you

RNBCs must now interpret the directed investment requirement as applying to the entire amount, not just the incremental portion. This removes potential confusion and ensures compliance with the original intent of the regulation.

What you must do

Who it affects

Residuary Non-Banking Companies (RNBCs), Compliance officers at RNBCs, Auditors reviewing RNBC directed investments

❓ Common questions

What does the removal of 'incremental ALD' mean for RNBCs?

It means the directed investment requirement applies to the total amount of such investments, not just the incremental additions made after a certain date.

Is this clarification retroactive?

The circular does not specify retroactive application, but RNBCs should ensure current compliance aligns with the corrected wording.

Which circular does this clarification amend?

It amends Circular No. DNBS (PD) CC.No.65/04.18.001/2005-06 dated March 31, 2006.

📜 Read the original circular — full text as issued by RBI
RBI/2005-06/348 DNBS (PD) CC.No. 66 / 04.18.001 /2005-06 April 04, 2006 To Residuary Non-Banking Companies (RNBCs) Dear Sirs, Maintenance of directed investments by RNBCs- Clarification Please refer to Circular No.: DNBS (PD) CC.No.65/04.18.001/2005-06 dated March 31, 2006 on the captioned subject. 2.In the above circular paragraph 5 (c) the words in brackets "i.e. incremental ALD" may be omitted. Yours faithfully, (P. Krishnamurthy)
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/348 · issued 04 Apr 2006. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Residuary Non-Banking Companies (RNBCs), Compliance officers at RNBCs, Auditors reviewing RNBC directed investments), your first concrete step on “RNBC Directed Investments: Clarification on Incremental ALD” is: “Update internal compliance manuals to reflect the removal of 'incremental ALD' from paragraph 5(c).” (RBI issued this 04 Apr 2006).

  1. Circular: RBI/2005-06/348 -- RNBC Directed Investments: Clarification on Incremental ALD
  2. Issued: 04 Apr 2006
  3. Action required: Update internal compliance manuals to reflect the removal of 'incremental ALD' from paragraph 5(c).
  4. Action required: Review current directed investment portfolios to ensure they meet the corrected requirement.
  5. Action required: Communicate this clarification to relevant compliance and investment teams.
  6. Action required: Monitor future RBI circulars for any further clarifications on RNBC directed investments.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2803&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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