RBI sets a valuation rule for banks' InvIT and REIT holdings

The Reserve Bank of India has amended its Master Direction on the Classification, Valuation and Operation of Investment Portfolio for commercial banks, inserting two new paragraphs, 84A and 84B, that for the first time spell out how banks must value units of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) held in their investment books. The Reserve Bank of India (Commercial Banks - Classification, Valuation, and Operation of Investment Portfolio) Third Amendment Directions, 2026, issued on 22 September 2026, state that quoted InvIT and REIT units must be valued the same way as any other quoted security, at their traded market price. Unquoted units, however, must be valued at the Net Asset Value that the InvIT or REIT is required to disclose under the Securities and Exchange Board of India's regulations.

If an InvIT or REIT fails to make that disclosure, its units held by the bank must be marked down to a deemed value of just one rupee, a deliberately punitive figure meant to discourage banks from carrying opaque holdings at an inflated value. The Reserve Bank said the change is meant to ensure clarity and uniform practices in valuation. It takes effect from the date of issue and binds every commercial bank in India that holds InvIT or REIT units in its investment portfolio.