What changed
The amendment replaces the previous IFR requirement with a new minimum of 5% of the investment portfolio classified under the Current Category. The requirement is now assessed annually based on book value at balance sheet date, addressing operational constraints faced by banks.
What it means for you
RCBs now have a clearer, simpler IFR computation basis tied to book value of Current Category investments, as per RBI amendment. The annual assessment gives banks more time to plan, but the 5% floor remains a binding constraint.
What you must do
- Recalculate IFR as 5% of book value of Current Category investments at each balance sheet date.
- Ensure annual assessment is completed before finalizing financial statements.
- Review investment portfolio classification to correctly identify Current Category holdings.
- Update internal policies and reporting templates to reflect the amended IFR computation method.
Who it affects
Rural Co-operative Banks (RCBs)
What is the new IFR requirement for RCBs?
RCBs must maintain an Investment Fluctuation Reserve of at least 5% of the book value of their investment portfolio classified under the Current Category, assessed annually as of the balance sheet date.
When does this amendment take effect?
The amendment is effective from the date of issue, May 18, 2026, and applies immediately to all RCBs.
Why was the IFR requirement amended?
RBI cited operational constraints faced by banks in maintaining IFR under the previous instructions, prompting the need for a simpler, annual assessment based on book value.