Reserve Bank of India (RBI) discontinues Investment Fluctuation Reserve requirement for commercial banks

Exam-focused facts from the 21 May 2026 current affairs briefing.

Key facts

The Reserve Bank of India (RBI) discontinued the requirement for commercial banks to maintain the Investment Fluctuation Reserve (IFR) effective from May 18, 2026.
The IFR served as an additional buffer to hedge against depreciation in the value of investments and was subject to mark-to-market (MTM) requirements.
Balances in the IFR as of May 17, 2026, shall be transferred to the Statutory Reserve, General Reserve, or Balance of Profit and Loss Account.
For foreign banks operating in India in branch mode, IFR balances shall be transferred to statutory reserves kept in Indian books or remittable surplus retained in Indian books.
The RBI amended guidelines for Small Finance Banks (SFBs) and Payments Banks (PBs) to clarify that transfers to IFR must be made from net profit after mandatory appropriations.