What changed
RBI has amended the Reserve Bank of India (Regional Rural Banks - Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025, to relax the rules for maintaining Investment Fluctuation Reserve (IFR).
What it means for you
This change allows Regional Rural Banks to use realised gains from investment sales to create IFR, subject to availability of net profit, until the IFR amount is at least 2% of the HFT and AFS portfolio.
What you must do
- Ensure compliance with the amended IFR rules
- Monitor and assess IFR requirements annually
Who it affects
Regional Rural Banks, Investment portfolio managers
What is the new rule for maintaining Investment Fluctuation Reserve (IFR)?
An RRB shall create IFR out of realised gains on sale of investments, subject to availability of net profit, until the amount of IFR is at least 2% of the HFT and AFS portfolio.
When does the new rule come into effect?
The new rule comes into effect from the date of issue, which is May 18, 2026.
What is the purpose of the amendment?
The amendment aims to relax the rules for maintaining IFR, allowing Regional Rural Banks to use realised gains from investment sales.