Reserve Bank of India (Regional Rural Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025 · RBI/DOR/2025-26/260

RBI/DOR/2025-26/260
DOR.MRG.REC.No.179/00-00-001/2025-26
November 28, 2025

Previous Versions

Reserve Bank of India (Regional Rural Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025 (Updated as on May 18, 2026)

Table of Contents

Chapter I: Preliminary
A. Short Title and Commencement
B. Applicability
C. Definitions
Chapter II: Role of the Board
Chapter III: General Guidelines
A. Investment Policy
B. General Instructions
C. Role of Sponsor Bank
Chapter IV: Classification of Investments
A. Categorisation of Investments
Held to Maturity (HTM)
B. Held for Trading (HFT) and Available for Sale (AFS)
C. Shifting Among Categories
D.1 Shift to / from HTM
D.2 Shift from AFS to HFT or Vice Versa
Chapter V: Valuation of Investments
A. Held to Maturity (HTM)
B. Held for trading (HFT) and Available for Sale (AFS)
Chapter VI: Market Value
A. Quoted Securities
B. Unquoted SLR Securities
C. Unquoted non-SLR Securities
Chapter VII: Investments in Government Securities
A. General Instructions
B. Access of NDS-OM
C. Subsidiary General Ledger (SGL) Account
D. Gilt Account
E. Settlement of transactions in Government Securities
F. Investment in Government Security through primary auction
G. Repo / Reverse Repo in Government Securities
Chapter VIII: Investments in Non-SLR Securities
A. General Instructions
B. Prudential Limit
C. Repo in Corporate bonds
D. Transactions in Commercial Paper (CP) and Certificates of Deposits (CDs)
E. Trading and Settlement in Corporate Bonds
F. Disclosures
G. Role of Boards
Chapter IX: Prudential Systems / Controls
A. Internal Control System
B. Engagement of Brokers
B.1 Empanelment of Brokers
B.2 Prudential Limits for Brokers
Chapter X: Audit, Review and Reporting
A. Audit
B. Review / Reporting
Chapter XI: Accounting and Provisioning
A. Income Recognition
B. Investment Fluctuation Reserve (IFR)
C. Non-Performing Investments (NPI)
Chapter XII: Repeal and Other Provisions
A. Repeal and Saving
B. Application of other laws not barred
C. Interpretations
Annex I: Reconciliation Statement

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, the RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.

Chapter I: Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Regional Rural Banks – Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025.

2. These Directions shall come into effect from the date of issue.

B. Applicability

3. These Directions shall be applicable to Regional Rural Banks (hereinafter collectively referred to as 'RRBs' and individually as 'RRB').

C. Definitions

4. For the purpose of these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below:

(1) ‘Available for Sale’ (AFS) means the category of investment portfolio of an RRB, which does not fall within the Held to Maturity (HTM), or Held for Trading (HFT) category.

(2) ‘Current or Valid Credit Rating’ for the purpose of determining rated security means a credit rating granted by a credit rating agency in India, registered with the Securities and Exchange Board of India (SEBI) and fulfilling the following conditions:

i The credit rating letter and rating rationale from the credit rating agency shall preferably be part of offer document.

ii The credit rating letter shall not be more than one month old and rating rationale shall not be more than one year old from the date of opening of issue.

iii In the case of secondary market acquisition, the credit rating of the issue shall be in force and confirmed from the website of the respective credit rating agency.

(3) 'Exchange’ means 'Recognized stock exchange' and shall have the same meaning as defined in Section 2 (f) of Securities Contracts (Regulation) Act, 1956, as amended from time to time. In the case of overseas jurisdictions, it shall refer to an exchange which is recognised or authorised by the securities market regulator of that jurisdiction.

(4) ‘Held to Maturity’ (HTM) means the category of investment portfolio maintained by an RRB with the intention to hold securities upto maturity.

(5) ‘Held for Trading’ (HFT) means the category of investment portfolio maintained by an RRB with the intention to trade in securities by taking advantage of the short- term price / interest rate movements.

(6) ‘Listed Security’ is a security which is listed on an exchange.

(7) ‘Rated Security’ means a security which carries current or valid credit rating.

(8) ‘Unrated securities’ means securities which do not have a current or valid credit rating.

5. All other expressions unless defined herein shall have the same meaning as have been assigned to them under the BR Act, the RBI Act, rules / regulations made thereunder, or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be.

Chapter II: Role of the Board

6. The Board of Directors (Board) shall approve the Investment Policy of an RRB as specified in paragraph 15(1).

7. The Board shall be responsible for the overall management of the investment portfolio of the RRB and shall take all investment decisions, as specified in paragraph 22.

8. The Board / ALCO / Investment Committee shall approve the transfer of securities within various categories as specified in paragraphs 36 to 42.

9. The Board shall fix a limit for the RRB’s total investment in non-SLR securities subject to prudential limits prescribed by the Reserve Bank and shall also prescribe sub-limits for total investments in each security-type as specified in paragraph 78.

10. The Board shall ensure that appropriate risk management systems are in place for capturing and analysing risks in respect of non-SLR investments and take remedial measures in time as specified in paragraph 86.

11. The Board shall review the various aspects of non-SLR investment at least twice a year as specified in paragraph 87.

12. The Board shall approve the panel of brokers with whom an RRB can do business with as specified in paragraph 90.

13. The Board shall be post facto informed of the breach of aggregate upper contract limit for individual brokers as specified in paragraph 92(4).

14. The Board shall review, on a half-yearly basis (as of March 31st and September 30th) the RRB’s investment portfolio. The review shall be placed before the Board within two months from the end of the respective half-year, i.e., by end-May and end-November as specified in paragraph 99.0

Chapter III: General Guidelines

A. Investment Policy

15. An RRB shall undertake investment activities as per the terms and conditions specified in these Directions.

(1) An RRB shall adopt a comprehensive Investment Policy duly approved by the Board.

(2) The Investment Policy shall, at the minimum, include:

i The investment criteria and objectives to be achieved while undertaking investment transactions keeping in view the various regulatory / statutory guidelines and the RRB's own internal requirements;

ii Securities in which investments can be made by the RRB;

iii The authority to put through deals;

iv Procedure for obtaining the sanction of the appropriate authority and putting through deals;

v Adherence to various prudential exposure limits including quantity (ceiling) and quality of each type of security to be held on its own investment account;

vi Policy regarding internal control mechanism, accounting standards, audit, review, dealings through brokers, systems for management of various risks, guidelines for valuation of the portfolio, and the reporting systems; and