The Reserve Bank of India (RBI) has issued the Small Finance Banks – Classification, Valuation, and Operation of Investment Portfolio Directions, 2025, under Section 35A of the Banking Regulation Act, 1949. These directions aim to provide a clear framework for small finance banks regarding the classification, valuation, and management of their investment portfolios. Effective immediately from the date of issuance, the directions are applicable to all small finance banks operating in India. While the directions outline permissible approaches and operational guidance, they do not automatically authorize any activity, transaction, or investment; banks must continue to comply with existing statutory and regulatory requirements when determining the permissibility of specific actions. By formalizing standards for investment management, RBI seeks to enhance transparency, strengthen risk management, and ensure the financial stability of small finance banks while safeguarding public interest and promoting disciplined investment practices within the sector.
RESERVE BANK OF INDIA
RBI/DOR/2025-26/193
DOR.MRG.REC.No.112/00-00-001/2025-26 | Dated: November 28, 2025
Reserve Bank of India (Small Finance Banks – Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025
In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (‘BR Act’), and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, the RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.
Chapter I – Preliminary
A. Short Title
1. These Directions shall be called the Reserve Bank of India (Small Finance Banks – Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025.
B. Effective Date
2. These Directions shall come into effect from the date of issue.
C. Applicability
3. These Directions shall be applicable to Small Finance Banks (hereinafter collectively referred to as ‘banks’ and individually as a ‘bank’).
Note: Mere mention of an activity, transaction or item in these Directions does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity, transaction, or item.
Read Full text of the Notification: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/193MD.pdf
