RBI amends investment portfolio norms for All India Financial Institutions, specifying classification and valuation standards to ensure uniformity and prudential oversight.
RBI Issues Portfolio Valuation Rules for Financial Institutions
The Reserve Bank of India has issued the Reserve Bank of India (All India Financial Institutions - Classification, Valuation, and Operation of Investment Portfolio) Amendment Directions, 2026, amending the 2025 Directions. The amendment focuses on Chapter VI concerning the market value of investments, aiming to ensure consistency, transparency, and prudent risk management across institutions such as NABARD, SIDBI, and EXIM Bank.
The update forms part of a broader regulatory package, with parallel amendments issued for Small Finance Banks, Payments Banks, Local Area Banks, and Commercial Banks (via Second or Third Amendment Directions, 2026). These amendments refine fair valuation methodologies, classification criteria between held-to-maturity, available-for-sale, and held-for-trading categories, and restrictions on reclassification to prevent window-dressing.
These directions enhance financial stability by mitigating valuation risks and strengthening balance sheet disclosures. Legal advisors must guide clients on compliance with revised reporting timelines, auditor confirmation requirements, and implications for capital adequacy. The coordinated rollout across bank categories reflects RBI’s unified approach to investment portfolio regulation in the post-Basel III implementation landscape.