RBI Sets NAV-or-₹1 Valuation Rule for Banks’ Unquoted InvIT and REIT Units

The Reserve Bank of India has changed how commercial banks value units of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) in their investment portfolios. The September 22, 2026 amendment takes effect from the date of issue and inserts separate valuation rules for InvIT and REIT holdings into the commercial-bank investment directions.

The most consequential rule concerns unquoted units. A bank must use the net asset value, or NAV, disclosed by the relevant trust. If the InvIT or REIT does not compute and disclose NAV in the manner and frequency required under the applicable SEBI regulations, RBI says the unit value must be treated as ₹1 for the purpose of these Directions. The same ₹1 treatment applies when the units are classified as infrequently traded under the relevant SEBI regulations.

Quoted units remain under the existing quoted-security framework

RBI has not created a new valuation formula for every InvIT or REIT holding. Quoted securities issued by these trusts, and quoted InvIT or REIT units, continue to be valued under the instructions already applicable to quoted securities. Other unquoted instruments issued by an InvIT or REIT also continue under the valuation methodology prescribed for those instruments.

The amended rules sit inside Chapter IX of the commercial-bank investment portfolio directions. Those Directions apply to commercial banks as defined there; Small Finance Banks, Payment Banks and Local Area Banks are excluded from that particular commercial-bank definition and are governed by their own RBI frameworks.

The ₹1 rule is a regulatory valuation treatment, not a market-price statement

The wording matters. RBI says affected units are to be “treated as ₹1 for the purpose of these Directions” when the prescribed NAV-disclosure condition fails or the units are infrequently traded. That does not mean RBI is declaring the economic worth of the entire trust to be ₹1, nor does the notification set a compulsory transaction price for a sale. It is a prudential valuation instruction for the bank’s investment-portfolio framework.

For finance, treasury, valuation and audit teams, the immediate control question is therefore not just whether a trust has published some NAV. The bank needs to establish whether the relevant unit is quoted or unquoted, whether the disclosed NAV meets the applicable SEBI manner and frequency requirement, and whether the unit falls into the infrequently traded category. Those classifications determine which valuation path the RBI direction requires.

Do not mix the valuation rule with lending and exposure rules

The September 22 amendment changes investment valuation. It does not by itself rewrite the separate rules governing how banks lend against, finance or measure exposures connected with REITs and InvITs. CA Samaaj has separately covered the RBI capital-market exposure framework affecting lending against securities including REIT and InvIT units. The two regimes may touch the same asset class, but they answer different compliance questions.

The practical consequence is that a bank holding an unquoted InvIT or REIT unit can no longer treat valuation as a generic unquoted-security exercise. The newly inserted paragraphs create an asset-specific decision tree tied to NAV disclosure and trading status, and they apply immediately from September 22.

Official source: View the official source document