The Reserve Bank of India issued draft Amendment Directions on April 8, 2026, revising the existing framework for Investment Fluctuation Reserve (IFR) across multiple categories of banks, including commercial banks, co-operative banks, small finance banks, payments banks, and regional rural banks. The draft proposes key changes such as removing the IFR requirement for banks already maintaining capital charge for market risk under revised investment portfolio norms, shifting IFR compliance from a continuous requirement to a balance sheet date requirement, and harmonising IFR-related provisions across different banking categories to reduce inconsistencies and improve regulatory clarity. These changes follow a comprehensive review of operational challenges faced by banks in maintaining IFR thresholds. The RBI has invited comments from stakeholders until April 29, 2026, through its “Connect 2 Regulate” platform or via official communication channels, signalling a consultative approach to refining prudential investment norms.
Reserve Bank of India
April 08, 2026
Reserve Bank of India today placed on its website the following draft Amendment Directions which modify the extant instructions on Investment Fluctuation Reserve (IFR) for various categories of banks:
The comments on the draft Amendment Directions are invited from the banks and other stakeholders till Apr 29, 2026. The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on the Reserve Bank’s website or may alternatively be forwarded to:
The Chief General Manager
Market Risk Group
Department of Regulation, Central Office
Reserve Bank of India, 12th Floor
Shahid Bhagat Singh Marg
Fort Mumbai – 400 001
Or
by email
With the subject line “Feedback on Draft Amendment Directions on Investment Fluctuation Reserve”
Background and Objective
The extant instructions require various categories of banks to maintain, on a continuous basis, a minimum level of IFR, computed in terms of the portion of their investment portfolio subject to mark-to-market requirements. Taking note of the operational challenges faced by banks in maintaining IFR above the regulatory threshold on a continuous basis as well as of the differences in the prudential frameworks applicable across various bank categories, the Reserve Bank has comprehensively reviewed the extant instructions. Accordingly, it is proposed (i) to dispense with the IFR requirement for bank categories maintaining capital charge for market risk and following the revised norms on classification, valuation, and operation of investment portfolio; (ii) that the banks shall comply with the IFR requirement as on balance sheet dates instead of on a continuous basis; and (iii) to harmonise certain IFR-related instructions across various categories of banks, thereby eliminating existing inconsistencies and enhancing regulatory clarity.
(Brij Raj)
Chief General Manager
Press Release: 2026-2027/44
