requirement on
8 April 2026 .
Change applies from 18 May 2026 .
Existing IFR balance is treated as Tier 1 capital .
RBI was established in 1935 under the RBI Act, 1934 .
Tier 1 capital is the core measure of a bank's financial strength (Basel norms).
CRAR stands for Capital to Risk-weighted Assets Ratio. It shows a bank's solvency.
Statutory Reserve and General Reserve are part of a bank's capital structure.
FAQ
Q1: What is the Investment Fluctuation Reserve?
A: It was an extra safety buffer that banks kept for losses when their investments lost value.
Q2: When did RBI remove this requirement?
A: RBI removed it on 8 April 2026, and it took effect from 18 May 2026.
Q3: What happens to the money already in this reserve?
A: It becomes Tier 1 capital and is moved to Statutory Reserve, General Reserve, or Profit and Loss Account.
Q4: Why did RBI remove this rule?
A: Because other rules like capital charges for market risk already protect banks.
Q5: Does this change apply to all banks?
A: Separate circulars were issued for cooperative banks, small finance banks, and payments banks to harmonise rules.
Month: Current Affairs - May 19, 2026
Category: RBI-InvestmentFluctuationReserve