Quick Answer
On September 22, 2026, the Reserve Bank of India issued five sets of Amendment Directions inserting identical new provisions on the valuation of Infrastructure Investment Trust (InvIT) and Real Estate Investment Trust (REIT) units into the investment-portfolio classification and valuation directions applicable to Commercial Banks, Small Finance Banks, Payments Banks, Local Area Banks, and All India Financial Institutions (AIFIs). Quoted InvIT and REIT securities are now expressly valued the same way as other quoted securities under each set of Directions. Unquoted units must be valued at the Net Asset Value (NAV) disclosed by the trust, but if the InvIT or REIT fails to compute and disclose NAV as required under the applicable SEBI regulations, or if its units are classified as infrequently traded, the units must be valued at ₹1. The Directions took effect immediately, with no transition period.
Quick Reference
All five notifications are dated September 22, 2026, and
The new provisions sit in different chapters depending on the institution category: Chapter VI ("market value of investments") for the All India Financial Institutions Directions, and Chapter IX ("fair valuation of investments") for the Commercial Banks, Small Finance Banks, Payments Banks and Local Area Banks Directions.
What Changed?
Before this amendment, none of the five sets of 2025 Directions contained a dedicated paragraph on valuing InvIT or REIT units. (This is CorpLawUpdates' interpretation of the "insertion" language used in the notifications, not a statement made by RBI itself.) In practice, entities would have had to apply the general valuation methodology for unquoted instruments, without express guidance on an NAV-based approach or a fallback value for non-disclosing or thinly traded trusts.
Why This Matters
InvITs and REITs have become a meaningful part of the investment books of Indian banks and financial institutions, and unquoted or thinly traded units are common, particularly for privately placed InvITs. Without a uniform valuation rule, similar holdings could be valued inconsistently across institutions — some marking to a trust-reported NAV, others applying cost or a generic unquoted-instrument formula. The new paragraphs remove that inconsistency and, more importantly, create a strong incentive for InvITs and REITs to disclose NAV punctually: failure to do so does not just create uncertainty for the trust, it now produces a near-total (₹1) valuation write-down at every regulated lender or AIFI holding the units.
Who Is Affected?
The source documents do not identify any entity within these five categories that is exempt from the amendment.
Detailed Provision-by-Provision Analysis
1. Quoted InvIT and REIT securities and units
Each set of Directions provides that quoted securities issued by InvITs/REITs, and quoted units of InvITs/REITs, are to be valued mutatis mutandis as per the instructions already given in the Directions for quoted securities generally. No new valuation method is created for the quoted case — the existing quoted-securities framework simply now expressly extends to these instruments.
2. Unquoted InvIT and REIT units — the NAV rule
Unquoted units must be valued at the NAV disclosed by the InvIT or REIT. This is the default rule and applies whenever the trust is meeting its disclosure obligations under the SEBI (Infrastructure Investment Trusts) Regulations, 2014 or the SEBI (Real Estate Investment Trusts) Regulations, 2014, as applicable.
3. The ₹1 fallback — non-disclosure and infrequent trading
The unit value is treated as ₹1 for the purposes of these Directions in two situations:
- the InvIT or REIT fails to compute and disclose its NAV in the manner and at the frequency specified under the applicable SEBI regulations; or
- the units are classified as infrequently traded under those same SEBI regulations.
Both conditions are determined under SEBI's InvIT/REIT framework, not by RBI: whether NAV was disclosed in the required manner and frequency, and whether units are "infrequently traded," are classifications made under the SEBI (Infrastructure Investment Trusts) Regulations, 2014 or SEBI (Real Estate Investment Trusts) Regulations, 2014, as applicable. The RBI Directions attach the ₹1 valuation consequence to whichever SEBI classification applies.
4. Other unquoted instruments issued by InvITs/REITs
Instruments other than units — for example, unquoted debt instruments an InvIT or REIT may issue — continue to be valued as per the methodology already specified elsewhere in the Directions for that category of instrument. In CorpLawUpdates' assessment, this part of the amendment does not change existing methodology; it cross-references it.
Exceptions and Exemptions
The five notifications do not carve out any exemption, grandfathering provision, or materiality threshold. The NAV rule and the ₹1 fallback apply uniformly to every unquoted InvIT/REIT unit held by the covered institutions.
When Does It Apply?
Practical Implications
Institutions holding unquoted InvIT or REIT units should expect to revisit their next valuation cycle immediately. Two practical questions follow directly from the text: first, whether each InvIT/REIT in the portfolio is in fact disclosing NAV at the frequency SEBI requires; second, whether any held units carry an "infrequently traded" classification under SEBI's InvIT or REIT regulations. Both determinations sit with the issuing trust and SEBI's framework, not with the bank or AIFI itself — which means investment and risk teams will likely need to actively track disclosure status of each trust they are exposed to, rather than relying on their own internal pricing models.
Compliance Action Plan
Frequently Asked Questions
What did RBI change on September 22, 2026?
RBI inserted new paragraphs into the 2025 investment-portfolio valuation Directions for Commercial Banks, Small Finance Banks, Payments Banks, Local Area Banks and All India Financial Institutions, setting out how InvIT and REIT units must be valued.
Who must comply with the new InvIT/REIT valuation rule?
Any of the five categories of RBI-regulated entities — Commercial Banks, Small Finance Banks, Payments Banks, Local Area Banks, or All India Financial Institutions — that hold InvIT or REIT securities, units, or other unquoted instruments.
When do the Amendment Directions come into force?
Immediately, from the date of issue: September 22, 2026. No later or phased effective date is specified.
How are quoted InvIT and REIT units valued?
The same way as any other quoted security under the applicable Directions — the amendment simply confirms this expressly.
How are unquoted InvIT and REIT units valued?
At the NAV disclosed by the InvIT or REIT, unless one of the ₹1 fallback conditions applies.
When are unquoted units valued at just ₹1?
When the InvIT or REIT fails to compute and disclose its NAV in the manner and frequency required under the SEBI (InvIT) Regulations, 2014 or SEBI (REIT) Regulations, 2014, or when its units are classified as infrequently traded under those regulations.
Does the amendment apply the same way to all five entity categories?
Yes. The substantive rule — quoted units valued as quoted securities, unquoted units valued at NAV, and a ₹1 fallback for non-disclosure or infrequent trading — is identical across all five notifications, though the inserted paragraph numbers and the legal provision cited (Section 45L of the RBI Act for AIFIs, Section 35A of the Banking Regulation Act for the four bank categories) differ.
Are any entities or instruments exempt from the new rule?
No exemption or threshold is stated in any of the five notifications.
CorpLawUpdates Analysis
For compliance teams, the immediate task is less about interpreting the rule — it is fairly mechanical — and more about operational readiness: knowing, unit by unit, whether each InvIT and REIT in the portfolio is currently NAV-compliant and whether any holding carries an infrequent-trading tag under SEBI's framework. Because both triggers for the ₹1 fallback are determined by facts outside the lending institution's control, the practical risk sits in monitoring, not in valuation methodology itself. Institutions with concentrated exposure to a small number of privately placed InvITs would be well advised to build direct lines of communication with the trustee/investment manager to get early warning of any NAV disclosure lapse, since the balance-sheet consequence under these Directions is immediate and severe.
It is also worth noting the differing amendment sequence across categories — this is the first amendment to the AIFI Directions, 2025, the second amendment to the Payments Banks, Small Finance Banks and Local Area Banks Directions, 2025, and the third amendment to the Commercial Banks Directions, 2025. This tells us only how many times each category's Classification, Valuation, and Operation of Investment Portfolio Directions have themselves been amended since November 2025 — it is not evidence about how often RBI revises each institution's broader regulatory framework generally.
Source Note
Documents: Reserve Bank of India Amendment Directions, 2026 (five notifications) — (1) All India Financial Institutions, RBI/2026-27/268, DOR.MRG.REC.No.232/00-00-017/2026-27; (2) Payments Banks, RBI/2026-27/267, DOR.MRG.REC.No.231/00-00-001/2026-27; (3) Small Finance Banks, RBI/2026-27/266, DOR.MRG.REC.No.230/00-00-001/2026-27; (4) Local Area Banks, RBI/2026-27/265, DOR.MRG.REC.No.229/00-00-001/2026-27; (5) Commercial Banks, RBI/2026-27/264, DOR.MRG.REC.No.228/00-00-001/2026-27. All dated September 22, 2026. Signatory: Sunil T S Nair, Chief General Manager, Reserve Bank of India. Primary sources: the Classification, Valuation, and Operation of Investment Portfolio Directions, 2025 for each institution category (each dated November 28, 2025), and the SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014, all published on the RBI and SEBI websites respectively.
This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Readers should verify the applicable primary regulatory source before taking action.
