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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Urban Co-operative Banks - Classification, Valuation and Operation of Investment Portfolio) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/284 DOR.MRG.REC.No.203/00-00-11/2025-26

RBI has issued RBI (Urban Co-operative Banks - Classification, Valuation and Operation of Investment Portfolio) Directions, 2025 effective from 28th November 2025. Key Highlights: 1. Applicability - All Urban Co-operative Banks (UCBs), meaning Primary Co-operative Banks as defined under the Banking Regulation Act. 2. Board-approved Investment Policy - UCBs must maintain a Board-approved Investment Policy covering objectives, eligible securities, risk limits, controls, and procedures. The policy must be reviewed yearly. 3. Strong Risk Assessment - Every investment must undergo full credit risk analysis. Banks must not rely only on external ratings and must monitor issuers regularly. All investments must be held in demat form. UCBs cannot take short positions unless specifically allowed. 4. Investment and Shifting Categories - All investments must be classified as HTM (Held to Maturity), AFS (Available for Sale), or HFT (Held for Trading). HFT securities must be sold within 90 days. 5. Shifting to or from HTM is allowed only once a year at the start of the accounting year. AFS to HFT shifting has limited permitted conditions. 5. Mandatory Audit and Review - Treasury operations require monthly concurrent audit and quarterly internal audit reports. The investment portfolio must be reviewed half-yearly and submitted to RBI. 6. Income, IFR, and Provisioning Rules - Income is recognised only on performing securities. UCBs must create IDR and maintain IFR of at least 5% of AFS + HFT. IFR (Investment Fluctuation Reserve) can be used only under strict conditions. For more information, please refer to the attached document.

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