The Reserve Bank of India (RBI), on April 8, 2026, released draft Amendment Directions proposing changes to the existing framework on Investment Fluctuation Reserve (IFR) across multiple categories of banks, including commercial banks, small finance banks, payments banks, co-operative banks, and regional rural banks. These draft directions also include related amendments to prudential norms on capital adequacy and financial statement disclosures, aiming to streamline investment portfolio regulations.
The RBI has proposed key changes to address operational challenges faced by banks in maintaining IFR continuously above prescribed thresholds. Notably, it is proposed to dispense with the IFR requirement for banks that already maintain capital charge for market risk under revised investment portfolio norms. Additionally, instead of continuous maintenance, banks would be required to meet IFR requirements only as on balance sheet dates, easing compliance burden while maintaining prudential safeguards.
Further, the draft seeks to harmonise IFR-related provisions across different categories of banks, reducing inconsistencies and improving regulatory clarity. Stakeholders, including banks and the public, are invited to submit comments and feedback by April 29, 2026, through RBI’s “Connect 2 Regulate” platform or via email/post, enabling participative regulatory development.
[Notification No. 2026-2027/44]
