Second Amendment Directions, 2026 update fair valuation practices for Small Finance Banks' investment portfolios.
RBI Amends Investment Valuation Norms for Small Finance Banks
The Reserve Bank of India has issued the Reserve Bank of India (Small Finance Banks - Classification, Valuation, and Operation of Investment Portfolio) Second Amendment Directions, 2026, effective September 22, 2026. These amend Chapter IX of the 2025 Directions to ensure clarity and uniformity in the fair valuation of investments.
The amendment focuses on improving transparency in asset pricing, particularly for illiquid securities. It mandates robust internal valuation committees and documentation standards to prevent misreporting and enhance auditability.
Legal advisors to Small Finance Banks must ensure alignment with the revised valuation framework. This update strengthens accountability and supports financial stability in the segment that serves underserved populations.