EconomyThursday, 21 May 2026·https://testbook.com/current-affairs/21-may-2026-daily-current-affairs
RBI discontinues mandatory Investment Fluctuation Reserve for commercial banks from 18 May 2026
RBI ended the mandatory Investment Fluctuation Reserve requirement for commercial banks on 18 May 2026.
Key highlights
Direct fact
On 18 May 2026, the Reserve Bank of India discontinued the mandatory requirement for commercial banks to maintain the Investment Fluctuation Reserve under the RBI (Commercial Banks - Classification, Valuation, and Operation of Investment Portfolio) Second Amendment Directions, 2026.
Key specifics
- Balances in the IFR as of 17 May 2026 are to be transferred to the Statutory Reserve, General Reserve or the Balance of Profit and Loss Account.
- For foreign banks operating through branches, balances must move to statutory reserves or non-repatriable remittable surplus retained in India.
- The new guidelines apply to commercial banks, cooperative banks, Small Finance Banks and Payments Banks.
- RBI was established on 1 April 1935 and nationalised on 1 January 1949.
- RBI functions as the lender of last resort and the sole authority for issuing banknotes in India.
Exam lens
Question type: banking regulation and reserve terminology, IFR transfer rules, RBI dates 1935 and 1949, and lender of last resort are high-yield TNPSC facts.