The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Payments Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025 for public comments. These directions, framed under Section 35A of the Banking Regulation Act, 1949, aim to establish a uniform regulatory framework governing the classification, valuation, and operational management of the investment portfolios held by Payments Banks (PBs). The objective is to promote prudence, transparency, and sound governance in PB investment operations, ensuring alignment with global accounting and prudential norms.
The mandates every Payments Bank to adopt a comprehensive Board-approved Investment Policy that defines permissible securities, prudential exposure limits, risk management procedures, and governance mechanisms. Banks are required to classify their investment portfolios into three primary categories—Held to Maturity (HTM), Available for Sale (AFS), and Fair Value through Profit and Loss (FVTPL)—with Held for Trading (HFT) forming a sub-category under FVTPL. The classification is to be based on the objective of acquisition and the Solely Payments of Principal and Interest (SPPI) criterion. The directions also lay down detailed norms for the role of the Board and its Investment Committee, covering approval processes, periodic reviews, internal controls, and the management of non-SLR investments.
Further, the framework prescribes valuation principles for quoted and unquoted securities, reclassification and sale conditions for HTM assets, and accounting norms for income recognition, broken-period interest, and provisioning for Non-Performing Investments (NPIs). It emphasizes independent credit assessment, risk diversification, and dematerialized holding of all investments. The directions also introduce provisions for fair value hierarchy (Level 1, 2, and 3 inputs), disclosures, and reconciliation mechanisms to ensure consistency and market discipline. Overall, the seeks to bring Payments Banks’ investment practices in line with international standards of transparency and risk-based financial management.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/214 DOR.MRG.REC.No.133/00-00-001/2025-26]
