The Reserve Bank of India issued the Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026, to address operational difficulties faced by Rural Co-operative Banks (RCBs) in maintaining the Investment Fluctuation Reserve (IFR). Exercising powers under Sections 35A and 56 of the Banking Regulation Act, 1949, RBI amended paragraph 115(1) of the 2025 Directions with immediate effect. Under the revised framework, every RCB must maintain an IFR of at least 5% of its investment portfolio classified under the “Current Category.” RBI clarified that this minimum requirement shall now be assessed annually and calculated with reference to the book value of investments in the Current Category as on the balance sheet date. The amendment aims to simplify compliance requirements and address operational constraints in IFR maintenance while ensuring adequate provisioning against investment-related risks. By linking the reserve requirement to annual assessment and book value computation, RBI intends to bring greater clarity, consistency, and practicality in investment portfolio management for Rural Co-operative Banks.
Reserve Bank of India
RBI/2026-27/88
DOR.MRG.REC.No.76/00-00-011/2026-27 | Dated: May 18, 2026
Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026
Please refer to paragraph 115 of Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025, dated November 28, 2025, on Investment Fluctuation Reserve (IFR). In view of certain operational constraints being faced by banks in the maintenance of IFR, there is a need to amend the extant instructions.
2. Accordingly, in exercise of the powers conferred by Section 35A read with Section 56 of the Banking Regulation Act, 1949 (hereinafter called the Act) and all other laws enabling the Reserve Bank in this regard, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Amendment Directions hereinafter specified.
3. (i) These Directions shall be called the Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026.
(ii) These Amendment Directions shall come into effect from the date of issue.
4. The Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025, dated November 28, 2025, are amended as provided below.
(i) Paragraph 115.(1) shall be substituted by the following, namely: –
“115.(1) An RCB shall maintain IFR of not less than 5 per cent of its investment portfolio classified under the Current Category. This minimum requirement shall be assessed annually and shall be computed with reference to the book value of its investments in the Current Category as of the balance sheet date.”.
(Sunil T S Nair)
Chief General Manager
