The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025.
The following has been stated namely: -
• The directions mandate that the boards of rural co-operative banks establish a robust investment policy, ensuring that investment activities align with the bank's risk appetite and strategic objectives. This policy should encompass guidelines for the categorization of investments, including Permanent and Current Investments, and outline procedures for shifting investments between categories.
• In terms of valuation, the directions stipulate that Permanent Investments should be valued at cost, while Current Investments should be marked to market, with appropriate provisions for depreciation. The market value of investments is to be determined based on quoted prices for listed securities, and for unquoted securities, valuation should be in accordance with RBI guidelines.
• Regarding investments in government securities, the directions emphasize compliance with the Subsidiary General Ledger (SGL) account requirements and encourage participation in the Negotiated Dealing System-Order Matching (NDS-OM) platform for enhanced transparency. The directions also address the use of repo/reverse repo transactions, short selling, and trading of government securities on stock exchanges, outlining the conditions under which these activities may be undertaken.
• For investments in non-SLR securities, the directions set prudential limits and require that transactions in instruments like Commercial Papers (CPs) and Certificates of Deposit (CDs) adhere to specified guidelines. The role of the board is underscored in overseeing these investments, ensuring that they are consistent with the bank's investment policy and risk management framework.
• This shall come into force from November 28, 2025.
[Notification no. - RBI/DOR/2025-26/309 DOR.MRG.REC.No.228/00-00-011/2025-26]
