The RBI has eliminated the mandatory Investment Fluctuation Reserve for commercial banks following changes in market regulations, requiring the transfer of existing reserves.
Abolition of Investment Fluctuation Reserve
The Reserve Bank of India (RBI) has abolished the requirement for commercial banks to maintain an Investment Fluctuation Reserve (IFR) based on recent changes in market risk and investment regulations. Current mandates require banks to transfer existing IFR balances to either their reserves or profit and loss accounts.
This decision reflects a shift in regulatory policy aimed at simplifying the operational framework for banks, reducing compliance burdens while ensuring that financial institutions can manage their assets more effectively.
Practitioners must advise their clients on the implications of this regulatory change and assist them in appropriately managing the transition of their existing IFR balances to comply with the new provisions.
Citations
- RBI Circular (2026) [unreported]
