The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025.
The following has been stated: -
•The RBI (Local Area Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025, provide a framework for investment classification, valuation, and management for Local Area Banks.
•Banks must classify investments as HTM, AFS, or FVTPL, establish Board-approved investment policies, and implement robust risk management and credit appraisal systems.
•Fair value measurement is mandated for initial recognition and subsequent valuation, with specific guidelines for quoted, unquoted, SLR, and non-SLR securities.
•Reclassifications, sales from HTM, and HFT operations are strictly regulated, with Board and RBI oversight to ensure prudential and transparent investment practices.
These directions shall become effective on November 28, 2025.
[Notification No.: RBI/DOR/2025-26/236 DOR.MRG.REC.No.155/00-00-001/2025-26]
