Reserve Bank of India (Regional Rural Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025 (Updated as on May 18, 2026)

1. Rating letter within a month

The rating letter must be under one month old and the rationale under one year.

2. Investment rules for RRBs

This paper sets how regional rural banks must class and value what they hold.

3. Rating letter in the offer

The rating letter and the reasoning should form part of the offer document.

4. Start date

These Directions came into effect on the day RBI issued them.

5. Who is covered

These Directions apply to every regional rural bank.

6. Rating must still stand

On a secondary market buy the rating must be in force and checked in the monthly bulletin.

7. An exchange abroad

Abroad, an exchange means one the local securities regulator recognises.

8. Rated means a live rating

A rated security is one rated by a SEBI registered agency and carrying a valid rating.

9. Unrated means no rating

An unrated security is one with no current and valid rating.

1. Two months to report

The half-yearly book review must reach the Board within two months, by end May and end November.

2. Board approves the policy

The Board must approve the investment policy.

3. Committee clears a shift

The Board, the ALCO or the investment committee must approve a move between books.

4. A cap on non-SLR

The Board must fix a cap on total non-SLR holdings and a sub-cap for each kind.

5. Non-SLR review twice a year

The Board must look at non-SLR investments at least twice a year.

6. Board clears the brokers

The Board must approve the panel of brokers the lender may deal with.

1. No client dealing

No trade may be done for a portfolio scheme client, as custodian or as agent.

2. Invest only as told here

Investment work must stay within the terms these Directions set.

3. A full written policy

A full investment policy approved by the Board must be adopted.

BankPulse example. A lender cannot buy securities on the strength of practice alone. It must adopt a comprehensive investment policy, and the Board must approve it. A policy the Board has not seen does not count.

4. Do your own rating

Own credit work must be done even on rated paper; outside ratings are not enough.

5. Track the issuer often

The issuer's health must be tracked each quarter or half year to catch rating drift.

6. Settle by the book

Trades must be settled as the regulator concerned lays down.

7. Only in demat form

Securities must be held only in dematerialised form.

8. A nodal officer named

A nodal officer must be named to deal with the sponsor bank on the book.

9. Sponsor reviews each quarter

The sponsor bank must review the book once a quarter for compliance.

10. Rating gates for bonds

Bond buying needs entry level ratings and limits by industry, maturity and issuer.

11. Own account only

Trades in securities may be done only on the lender's own investment account.

1. Held to Maturity cap

A UCB cannot hold more than 25% of its investments as Held to Maturity.

2. 90-day trading rule

Any security bought for short-term trading must be sold within 90 days.

1. 90-day non-performing test

A bond or debenture becomes non-performing if interest stays unpaid for over 90 days.

BankPulse example. Interest on a debenture falls due on 1 June and is not paid. The holding stays healthy for 90 days. On the 91st day it becomes non-performing.

2. Only if serviced on time

That accrual holds only where the rate is fixed and interest is not in arrears.

1. Later update

RBI updated these Directions again on May 18, 2026.

2. Older rules cancelled

This cancels the older RBI rules on how banks classify and value their investment portfolio.

3. Old actions preserved

Actions already taken under the old rules still follow those old rules.