This circular, issued by the Reserve Bank of India (RBI) on March 23, 2022, amends the Master Direction DOR.MRG.4221.04.141/2021-22 dated August 25, 2021, concerning the classification, valuation, and operation of investment portfolios for commercial banks. Specifically, the amendment addresses the prudential treatment of investments in Alternative Investment Funds (AIFs). The circular stipulates that investments in Category I and Category II AIFs, including Venture Capital Funds (VCFs), will receive the same prudential treatment as currently applied to VCFs. Additionally, the circular provides clarifications and updates to sections 4(a)(vii), 10(c)(ix), 12(ii)(b), 12(ii)(d)(ix), 13(iv)(b), 16(i), 16(ii), 18(i)(e)(ii), and Annex II of the Master Direction, based on feedback received from banks. These instructions are effective immediately and applicable to all commercial banks excluding Regional Rural Banks. Further inquiries can be directed to the Department of Regulation, Central Office, 12th/13th Floor, Central Office Bhavan, Shahid Bhagat Singh Marg, Mumbai 400001. Contact can be made via Tel No: 22661602, 22601000 or Fax No: 022-2270 5670, 2260 5671, 2270 5691, 2260 5692.
Key Entities Referenced
Reserve Bank of India: The central bank of India.
Classification, Valuation and Operation of Investment Portfolio of Commercial Banks Directions, 2021: A set of directions issued by the Reserve Bank of India regarding the classification, valuation, and operation of investment portfolios of commercial banks.
Alternative Investment Funds: Privately pooled investment fund, hedge fund, private equity fund or venture capital fund
Venture Capital Funds: A type of private equity investment that is typically made in early-stage companies with high growth potential.
Commercial Banks: Financial institutions that accept deposits and make loans to businesses and individuals.
Regional Rural Banks: Regional Rural Banks are financial institutions in India that operate at the regional level.
Mumbai, Maharashtra: A city in India where the central office of Department of Regulation is located.
Usha Janakiraman: Chief General Manager at Reserve Bank of India
The guidelines have been repealed. Please refer to the Reserve Bank of India (Classification, Valuation and Operation of Investment
Portfolio of Commercial Banks) Directions, 2021.
RBI/2021-22/185
DOR.MRG.REC.96/21.04.141/2021-22 March 23, 2022
Dear Sir / Madam,
Master Direction - Classification, Valuation and Operation of Investment
Portfolio of Commercial Banks (Directions), 2021 - Amendment
Please refer to the Master Direction DOR.MRG.42/21.04.141/2021-22 dated August
25, 2021 – ‘Classification, Valuation and Operation of Investment Portfolio of
Commercial Banks (Directions), 2021’ (hereinafter referred as ‘Master Direction’).
2. The Master Direction outlines the prudential treatment for investment in Venture
Capital Funds (VCFs). We have received queries from banks regarding the
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applicability of these instructions for investment in Alternative Investment Funds
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(AIFs). a
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3. Accordingly, on a review, it has been hdecided that the investment in Category I and
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Category II AlFs, which includes VCWFis, shall receive the same prudential treatment as
applicable for investment in VCFs.
4. In addition, based on feedback from banks, clarifications / updates have been
provided regarding section 4(a)(vii), 10(c)(ix), 12(ii)(b), 12(ii)(d)(ix), 13(iv)(b), 16(i),
16(ii), 18(ii)(e)(ii) and Annex II of the Master Direction.
5. The relevant sections of the Master Direction have been amended to reflect the
aforementioned changes.
Applicability
6. This circular is applicable to all Commercial Banks (excluding Regional Rural
Banks).
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�व�नयमन �वभाग, क�द्र�य कायार्लय, 12वी ं और 13वी ं मंिज़ल, क�द्र�य कायार्लय भवन, शह�द भगत �सहं माग,र् मंबु ई 400001
टेल�फोन /Tel No: 22661602, 22601000 फैक्स/Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
Department of Regulation, Central Office, 12th & 13th Floor, Central Office Bhavan, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691, 5692
िहंदी आसान है, इसका प्रयोग बढ़ाइए7. These instructions shall come into force with immediate effect.
Yours faithfully,
(Usha Janakiraman)
Chief General Manager
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