RBI discontinues Investment Fluctuation Reserve for commercial banks
Commercial banks must transfer existing IFR balances below the line
RBI
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Change
RBI discontinued the Investment Fluctuation Reserve requirement for commercial banks from May 18, 2026 and prescribed how existing IFR balances as of May 17, 2026 must be transferred.
Why it matters
The amendment removes IFR as a continuing reserve requirement under RBI’s investment-portfolio directions. Commercial banks must move existing IFR balances to statutory reserve, general reserve or profit and loss balance, while foreign bank branches in India must route the balance to Indian-book reserves or non-repatriable retained surplus.
Implications
- — Commercial-bank accounting teams must transfer IFR balances held as of May 17, 2026 below the line to statutory reserve, general reserve or balance of profit and loss account.
- — Foreign bank branches operating in India must transfer IFR balances to statutory reserves kept in Indian books or to remittable surplus retained in Indian books that remains non-repatriable while the bank operates in India.
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