RBI Small Finance Banks Investment Portfolio Second Amendment Directions 2026
The Reserve Bank of India has officially released the Reserve Bank of India (Small Finance Banks - Classification, Valuation, and Operation of Investment Portfolio) Second Amendment Directions, 2026. This regulatory update introduces critical modifications concerning the fair valuation of investments in Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) by small finance banks across the country.
Issued under the reference number RBI/2026-27/266 and dated September 22, 2026, these directions aim to establish uniform valuation practices and ensure transparency within the financial portfolios of regulated institutions. Stakeholders, including small finance banking entities and financial analysts, must review these updated guidelines to maintain compliance with statutory norms.
Overview of RBI Second Amendment Directions 2026
The Reserve Bank of India issued these latest guidelines by exercising powers conferred under Section 35A of the Banking Regulation Act, 1949. These instructions modify the extant Reserve Bank of India (Small Finance Banks - Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025, specifically addressing Chapter IX regarding the fair valuation of investments. The modifications come into force immediately from the date of issue.
Key Details Table
| Feature | Details |
|---|---|
| Regulatory Body | Reserve Bank of India (RBI) |
| Directive Name | SFB Classification, Valuation, and Operation of Investment Portfolio Second Amendment Directions, 2026 |
| Circular Number | RBI/2026-27/266 (DOR.MRG.REC.No.230/00-00-001/2026-27) |
| Issuance Date | September 22, 2026 |
| Effective Date | September 22, 2026 |
| Affected Entities | Small Finance Banks (SFBs) |
Important Dates Table
| Event Description | Date |
|---|---|
| Notification Release Date | September 22, 2026 |
| Implementation Date | September 22, 2026 |
Valuation Guidelines for InvITs and REITs
The primary objective of the 2026 amendment is to clarify and standardize how small finance banks evaluate units and instruments associated with Infrastructure Investment Trusts and Real Estate Investment Trusts.
Infrastructure Investment Trusts (InvITs)
Under the newly inserted Paragraph 82A, quoted securities and units issued by InvITs must be valued mutatis mutandis according to existing instructions specified for quoted securities within the master directions. For unquoted instruments, units shall be valued at the Net Asset Value (NAV) disclosed by the respective InvIT. If an InvIT fails to calculate and disclose its NAV in compliance with the frequency and manner dictated by SEBI (Infrastructure Investment Trusts) Regulations, 2014, the value of those units will be evaluated at one rupee (₹1) for these regulatory purposes. This ₹1 rule also applies to InvIT units categorized as infrequently traded under SEBI regulations. Other unquoted instruments issued by an InvIT follow the standard methodology previously prescribed.
Real Estate Investment Trusts (REITs)
Similarly, Paragraph 82B governs the valuation framework for Real Estate Investment Trusts. Quoted securities and units of REITs are evaluated mutatis mutandis based on instructions for quoted securities. Unquoted units must reflect the NAV disclosed by the REIT. In instances where a REIT does not compute or disclose its NAV as mandated by SEBI (Real Estate Investment Trusts) Regulations, 2014, the units will automatically be valued at ₹1. Infrequently traded REIT units under SEBI norms are subject to the same treatment. Other unquoted instruments issued by REITs adhere to the standard evaluation methodologies.
Who Is Affected and Next Steps
Small finance banks maintaining investment portfolios containing units or instruments of InvITs and REITs are directly impacted by these statutory directions. Banking institutions should immediately align their internal valuation models, accounting practices, and portfolio reporting mechanisms with the revised instructions. Comprehensive details and official documentation can be accessed directly through the official website of the Reserve Bank of India.
Frequently Asked Questions
When did the RBI Small Finance Banks Second Amendment Directions 2026 come into effect?
The amendment directions came into effect immediately from the date of issue, which is September 22, 2026.
Which statutory act grants the RBI power to issue these directions?
The Reserve Bank issued these directions under Section 35A of the Banking Regulation Act, 1949.
How are unquoted InvIT units valued if the trust fails to disclose its NAV?
If an InvIT fails to compute and disclose its NAV as per SEBI regulations, the value of its units shall be treated as ₹1 for the purpose of these directions.
Do these new rules apply to Real Estate Investment Trusts as well?
Yes, Paragraph 82B introduces parallel valuation rules for REITs, including guidelines for both quoted and unquoted units.
Where can banks find the official circular for these directions?
The official circular (RBI/2026-27/266) is available on the official website of the Reserve Bank of India.
Official Links
Details are compiled from official notices. Always confirm eligibility, dates and fees on the official website before applying.