RBI Invites Comments on Draft Amendment Directions Reviewing IFR Norms

The Reserve Bank of India (RBI) has issued draft Amendment Directions to review the existing framework governing the Investment Fluctuation Reserve (IFR) for various categories of banks.

1. Objective of the Draft Amendment

The proposal aims to:

• Rationalise and harmonise IFR-related instructions across bank categories
• Align prudential norms with market risk frameworks
• Simplify compliance requirements

2. Key Proposed Changes

2.1 Dispensing with IFR Requirement

• The draft proposes to remove the requirement of maintaining IFR for banks that already maintain a capital charge for market risk

This avoids duplication of prudential buffers.

2.2 Compliance at Balance Sheet Dates

• Banks may be allowed to ensure compliance with IFR requirements at balance sheet dates
• This reduces the need for continuous maintenance, easing operational burden

2.3 Harmonisation Across Bank Categories

The draft seeks to:

• • Standardise IFR instructions across different categories of banks
  • Eliminate inconsistencies in current guidelines

3. Public Consultation

• RBI has invited comments from stakeholders
• Feedback can be submitted under the ‘Connect 2 Regulate’ framework
• The last date for submission is 29th April 2026

4. Conclusion

The draft directions reflect RBI’s intent to streamline prudential norms, reduce regulatory overlap, and create a more coherent and efficient framework for managing investment-related risks in banks.