RBI Drops Investment Fluctuation Reserve Requirement for Banks
The Reserve Bank of India has ended the mandate for commercial banks to maintain the Investment Fluctuation Reserve, a safeguard against investment value dips. The change, effective May 18, 2026, aligns with updated prudential frameworks. The remaining IFR funds will be reallocated to statutory or general reserves.
On Monday, the Reserve Bank of India announced the cessation of the Investment Fluctuation Reserve (IFR) requirement for commercial banks. This buffer was traditionally kept to mitigate depreciation risks in investment values.
The RBI stated that this decision, effective from May 18, 2026, is in response to advancements in prudential guidelines related to market risks and bank investments.
The balances in the IFR as of May 17, 2026, will be redistributed to statutory reserves, general reserves, or the profit and loss account. The change also extends to foreign banks operating as branches in India, as well as cooperative and small finance banks.
(With inputs from agencies.)
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