RBI Updates Framework for Online Outward Remittance Services

The Reserve Bank of India (RBI) has revised the operating framework for facilitating cross-border outward remittance services through non-bank online entities in partnership with Authorised Dealer (AD) Category-I banks.

Under the revised framework, RBI has discontinued the prior approval requirement for such tie-up arrangements. AD banks are now required to ensure compliance with FEMA, KYC, cybersecurity, customer protection, transparency, grievance redressal, and fund security requirements while facilitating outward remittances through digital platforms such as websites, mobile applications, and online interfaces.

The framework mandates clear disclosure of exchange rates, transaction charges, settlement timelines, and customer grievance mechanisms. It also prescribes requirements relating to data privacy, internal controls, operational resilience, and protection of remitter funds.

The directions are effective immediately and have been issued under the Foreign Exchange Management Act, 1999.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13449

RBI Discontinues Investment Fluctuation Reserve Requirement for Commercial Banks

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Classification, Valuation, and Operation of Investment Portfolio) Second Amendment Directions, 2026, revising the prudential framework relating to Investment Fluctuation Reserve (IFR).

Under the amendment, the requirement for maintaining IFR has been discontinued with effect from May 18, 2026. Banks are required to transfer the IFR balance existing as on May 17, 2026, to the Statutory Reserve, General Reserve, or Balance of Profit & Loss Account.

For foreign banks operating in India through branch mode, the IFR balance must be transferred to statutory reserves maintained in Indian books or to remittable surplus retained in Indian books that is non-repatriable while the bank operates in India.

The amendment also deletes paragraphs 106 to 108 of the existing Directions and comes into effect immediately.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13450

RBI Revises IFR Requirements for Small Finance Banks

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Small Finance Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026, revising the norms for maintenance of the Investment Fluctuation Reserve (IFR).

Under the amended framework, Small Finance Banks are required to maintain an IFR of at least two percent of their AFS and FVTPL (including HFT) investment portfolio, based on annual balance sheet values. The reserve must be created from realised gains on sale of investments, subject to availability of net profit, after mandatory appropriations.

The Amendment Directions are effective from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13451

RBI Revises Investment Fluctuation Reserve Norms for Payments Banks

The Reserve Bank of India has issued the Reserve Bank of India (Payments Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026 to revise the framework relating to the Investment Fluctuation Reserve (IFR).

Under the amended provisions, Payments Banks are required to create an IFR from realised gains on the sale of investments, subject to the availability of net profit, until the reserve reaches at least 2% of the AFS and FVTPL (including HFT) investment portfolio.

The minimum IFR requirement will be assessed annually based on the value of the AFS and FVTPL (including HFT) portfolio as on the balance sheet date. Transfers to IFR are to be made from net profit after mandatory appropriations.

The amendment has been introduced to address operational constraints faced by banks in maintaining IFR and is effective from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13452

RBI Discontinues Investment Fluctuation Reserve Requirement for Local Area Banks

The Reserve Bank of India has issued the Reserve Bank of India (Local Area Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026, revising the framework relating to the Investment Fluctuation Reserve (IFR) for Local Area Banks.

Under the amended directions, the requirement to maintain an IFR has been discontinued with effect from May 18, 2026. Banks are required to transfer the existing IFR balance as on May 17, 2026, to the Statutory Reserve, General Reserve, or Balance of Profit & Loss Account through a ‘below the line’ adjustment.

The amendment has been introduced in view of developments in the prudential framework governing market risk and investment management for Local Area Banks. In addition, paragraphs 105 to 107 of the existing Directions have been deleted.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13453

RBI Revises Investment Fluctuation Reserve Framework for Urban Co-operative Banks

The Reserve Bank of India has issued the Reserve Bank of India (Urban Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026 to revise the Investment Fluctuation Reserve (IFR) requirements for Urban Co-operative Banks (UCBs).

Under the amended framework, UCBs are required to maintain a minimum IFR of 5% of their investment portfolio in the Held for Trading (HFT) and Available for Sale (AFS) categories. The minimum requirement will be assessed annually based on the book value of investments as on the balance sheet date.

The Directions also permit UCBs to maintain a higher IFR level based on the size and composition of their investment portfolio, subject to Board approval.

Further, UCBs may draw down the IFR balance exceeding the mandatory 5% threshold and transfer such excess to the Profit and Loss Account at the end of an accounting year.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13454

RBI Revises Investment Fluctuation Reserve Requirement for Rural Co-operative Banks

The Reserve Bank of India has issued the Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026 to revise the Investment Fluctuation Reserve (IFR) framework for Rural Co-operative Banks (RCBs).

Under the amended directions, Rural Co-operative Banks are required to maintain an IFR of at least 5% of their investment portfolio classified under the Current Category. The minimum IFR requirement will be assessed annually based on the book value of investments in the Current Category as on the balance sheet date.

The amendment has been introduced to address operational constraints faced by banks in maintaining IFR and comes into effect from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13455

RBI Revises Investment Fluctuation Reserve Norms for Regional Rural Banks

The Reserve Bank of India has issued the Reserve Bank of India (Regional Rural Banks – Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026 to revise the framework relating to the Investment Fluctuation Reserve (IFR) for Regional Rural Banks (RRBs).

Under the amended directions, RRBs are required to create an IFR from realised gains on the sale of investments, subject to the availability of net profit, until the reserve reaches at least 2% of the Held for Trading (HFT) and Available for Sale (AFS) investment portfolio.

The minimum IFR requirement will be assessed annually based on the book value of investments in the AFS and HFT categories as on the balance sheet date.

The amendment has been introduced to address operational constraints faced by banks in maintaining IFR and comes into effect from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13456

RBI Revises Capital Adequacy Norms for Commercial Banks

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Sixth Amendment Directions, 2026, following changes introduced under the revised investment portfolio framework for commercial banks.

As part of the amendment, sub-paragraph 21(i)(b) of the existing Capital Adequacy Directions, 2025 has been deleted. The revision aligns the capital adequacy framework with the updated investment classification, valuation, and portfolio operation guidelines issued by RBI.

The amendment has come into effect from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13457

RBI Updates Financial Statement Disclosure Norms for Commercial Banks

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Financial Statements: Presentation and Disclosures) Sixth Amendment Directions, 2026, following revisions to the investment portfolio framework for commercial banks.

The amendment revises the disclosure instructions relating to “Revenue and Other Reserves” under Schedule 2(IV), clarifying that revenue reserves include all reserves other than capital reserves and exclude amounts retained for depreciation, diminution in asset value, renewals, or known liabilities.

RBI has also updated the disclosure format for the movement of provisions held towards Non-Performing Investments (NPIs). Banks are now required to disclose the opening balance, provisions made during the year, write-offs or write-backs, and the closing balance of NPI provisions.

The amendment has come into effect from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13458

RBI Revises Financial Statement Disclosure Norms for Local Area Banks

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Third Amendment Directions, 2026, following changes to the investment portfolio framework for Local Area Banks.

The amendment revises the disclosure guidance relating to “Revenue and Other Reserves” under Schedule 2(IV), clarifying that revenue reserves include all reserves other than capital reserves and exclude amounts retained towards depreciation, diminution in asset value, renewals, or known liabilities.

RBI has also updated the disclosure format for provisions relating to Non-Performing Investments (NPIs). Local Area Banks are now required to disclose the opening balance of NPI provisions, additions made during the year, write-offs or write-backs, and the closing balance.

The amendment has come into effect from the date of issue.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13459