Money
The Reserve Bank of India has introduced strict new valuation guidelines for All India Financial Institutions holding units in Infrastructure Investment Trusts and Real Estate Investment Trusts.
Key points
- Issued by the Reserve Bank of India on September 22, 2026 under the RBI Act, 1934.
- Introduces new paragraphs 58A and 58B regarding InvITs and REITs valuation.
- Unquoted units failing to disclose NAV or classified as infrequently traded must be valued at ₹1.
The Reserve Bank of India (RBI) has released crucial regulatory updates concerning how All India Financial Institutions classify, value, and operate their investment portfolios. Announced by Chief General Manager Sunil T S Nair, the updated regulations establish formal guidelines for units held in Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). The central bank noted that these amendments are designed to bring clarity and establish uniform valuation practices across regulated entities.
Under the newly inserted Paragraph 58A and Paragraph 58B of the master directions, quoted units and securities issued by InvITs and REITs will follow standard quoted security valuation procedures. However, stricter rules have been laid down for unquoted instruments. Specifically, unquoted units must be valued at the net asset value (NAV) publicly disclosed by the respective trust.
Key Provisions for Unquoted Trusts
The revised regulatory framework imposes a punitive accounting measure if trusts fail to comply with disclosure norms. If an InvIT or REIT fails to compute and disclose its NAV in accordance with the frequencies mandated by Securities and Exchange Board of India (SEBI) regulations, the value of those units will automatically be written down to ₹1 for regulatory and balance sheet purposes.
- Quoted InvIT and REIT units follow standard quoted security valuation methodologies.
- Unquoted units must rely on the official NAV disclosed by the trust.
- Non-compliant or infrequently traded units face a severe valuation markdown to ₹1.
These measures align central bank oversight more closely with existing SEBI frameworks for alternative investment instruments, reducing valuation discrepancies across institutional balance sheets.
What this means for investors
For institutional investors and market participants, this directive reinforces strict compliance and transparency standards regarding alternative assets. When financial institutions hold unquoted units in infrastructure or real estate trusts, any failure by the trust to report NAV accurately can immediately impact the institution’s reported portfolio valuation via the strict ₹1 markdown rule.
While this regulatory update primarily targets All India Financial Institutions rather than retail investors directly, it highlights the broader regulatory push toward rigorous asset backing and accurate disclosure. Investors holding shares in regulated financial institutions should note that transparency in alternative holdings is becoming a non-negotiable standard for balance sheet health.
Frequently asked questions
Who does this RBI directive apply to? The amendment applies directly to All India Financial Institutions governed by the Reserve Bank of India.
What happens if an InvIT or REIT fails to disclose its NAV? Any unquoted units of that trust must be valued at a nominal value of ₹1 for the purpose of the financial institution’s investment portfolio.
This article is for information only and is not investment advice. Do your own research or consult a licensed adviser before investing.
Based on information published by Reserve Bank of India (RBI) — notifications. Source: Reserve Bank of India (RBI) — notifications. Spotted an error? corrections@moneypuran.com
