RBI Directions on Investment Portfolio for Payments Banks
Current · Source: Reserve Bank of India · RBI/DOR/2025-26/214 · issued 28 Nov 2025 · ~1 min read
Quick answerRBI issues directions for Payments Banks on classification, valuation, and operation of investment portfolio to ensure prudent risk management and regulatory compliance.
The rule, in the simplest words
Payments Banks must sort their investments into four categories: Held To Maturity (HTM), Available for Sale (AFS), Fair Value through Profit and Loss (FVTPL), and Investments in Associates and Joint Ventures.
HTM investments are valued at cost or amortized cost; all other investments are valued at fair value.
When an investment is moved to a different category, its fair value is updated, and any past gains or losses in AFS are removed and added to the new value so the book value matches what it would have been if it had always been in HTM.
Banks must follow an approved investment policy and have strong internal controls for investment operations.
Brokers and auditors must be engaged following the RBI guidelines.
How it plays out — a real example
Rajesh, a gold‑loan officer in Indore, notices a government bond that was previously classified as Available for Sale (AFS). He reclassifies it to Held To Maturity (HTM), updates its fair value, and adjusts the past AFS gains, ensuring the bank’s records are accurate and compliant. This careful action keeps the bank’s portfolio safe and the regulator happy.
What changed
RBI has issued directions for Payments Banks on investment portfolio classification, valuation, and operation to ensure prudent risk management and regulatory compliance. The directions outline the framework for investment policy, categorization of investments, and operational guidelines.
What it means for you
These directions will help Payments Banks to manage their investment portfolios prudently, ensure regulatory compliance, and maintain the stability of the financial system. It will also help in preventing potential risks associated with investments and ensure that the banks maintain a healthy capital adequacy ratio.
What you must do
Classify investments into Held To Maturity (HTM), Available for Sale (AFS), Fair Value through Profit and Loss (FVTPL), and Investments in Associates and Joint Ventures
Value investments at fair value, except for HTM investments which are valued at cost or amortized cost
Operate investment portfolio in accordance with the approved investment policy framework
Maintain a robust internal control system for investment operations
Engage brokers and auditors as per the guidelines
Who it affects
Payments Banks
❓ Common questions
What is the effective date of these directions?
These directions come into effect from the date of issue, which is November 28, 2025.
What is the purpose of these directions?
The purpose of these directions is to ensure prudent risk management and regulatory compliance by Payments Banks in their investment portfolio operations.
What are the key changes introduced by these directions?
The key changes introduced by these directions include the classification of investments, valuation of investments, and operational guidelines for investment portfolio operations.
📜 Read the original circular — full text as issued by RBI
The investments are reclassified at their fair value at the reclassification date. However, the cumulative gain / loss previously recognised in the AFS-Reserve shall be withdrawn therefrom and adjusted against the fair value of the investments at the reclassification date to arrive at the revised carrying value. Thus, the revised carrying value shall be the same as if the bank had classified the investment in HTM ab initio itself.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/DOR/2025-26/214 · issued 28 Nov 2025. The plain-English explanation above is BankPulse’s own independent summary.
Maintain a robust internal control system for investment operations
📜 Compliance
Classify investments into Held To Maturity (HTM), Available for Sale (AFS), Fair Value through Profit and Loss (FVTPL), and Investments in Associates and Joint Ventures
Value investments at fair value, except for HTM investments which are valued at cost or amortized cost
Operate investment portfolio in accordance with the approved investment policy framework
Engage brokers and auditors as per the guidelines
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Payments Banks), your first concrete step on “RBI Directions on Investment Portfolio for Payments Banks” is: “Classify investments into Held To Maturity (HTM), Available for Sale (AFS), Fair Value through Profit and Loss (FVTPL), and Investments in Associates and Joint Ventures” (RBI issued this 28 Nov 2025).
Circular: RBI/DOR/2025-26/214 -- RBI Directions on Investment Portfolio for Payments Banks
Issued: 28 Nov 2025
Action required: Classify investments into Held To Maturity (HTM), Available for Sale (AFS), Fair Value through Profit and Loss (FVTPL), and Investments in Associates and Joint Ventures
Action required: Value investments at fair value, except for HTM investments which are valued at cost or amortized cost
Action required: Operate investment portfolio in accordance with the approved investment policy framework
Action required: Maintain a robust internal control system for investment operations
Action required: Engage brokers and auditors as per the guidelines
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 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=13094&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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