New Delhi, May 20 -- The Reserve Bank of India (RBI) has issued final directions dispensing with the mandatory Investment Fluctuation Reserve (IFR) requirement for banks that already maintain a capital charge for market risk and adhere to the revised norms governing classification, valuation, and operation of investment portfolios.

What Is the IFR?

The IFR is a financial buffer that banks are required to maintain to absorb valuation losses in their investment portfolios, particularly those arising from interest rate movements and broader market volatility. The RBI's latest move effectively renders this buffer redundant for banks already operating under a more rigorous, risk-sensitive framework.

Key Changes Under the Revised Framework ...