RBI amends IFR directions; discontinues IFR requirement
📅 Published 20 May 2026 · May 2026
RBI amends IFR directions; discontinues IFR requirement
What happened: RBI issued final amendments revising Investment Fluctuation Reserve (IFR) norms; IFR requirement discontinued from 18 May 2026.
IFR: Reserve created from profits to absorb MTM losses on investments (esp. government securities).
Reason: Existing capital and risk management norms deemed sufficient.
Significance:
Banking regulation: Simplifies capital/reserve rules; impact on bank profit distribution and capital buffers.
Risk management: Raises discussion on adequacy of capital in stressed market scenarios.
UPSC relevance: Financial regulation, central bank policy, banking stability frameworks.
Possible Q: Analyse the implications of discontinuing IFR for bank stability and market discipline.