Date: 2019-06-10Category: Not ApplicableState: Union GovernmentCountry: India
Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks - Sale of investments held under Held to Maturity (HTM) category
**Summary:**
This circular, DBR.No.BP.BC.46/21.04.141/2018-19, issued by the Reserve Bank of India (RBI) on June 10, 2019, addresses prudential norms for the classification, valuation, and operation of investment portfolios by commercial banks, specifically concerning the sale of investments held under the Held-to-Maturity (HTM) category. It references and updates the guidelines outlined in circular DBR No. BP.BC.62/1.04.141/2015-16 dated July 1, 2015. The circular clarifies that if sales and transfers of securities to/from the HTM category exceed 5% of the book value of investments held in HTM at the beginning of the year, banks must disclose the market value of HTM investments and the excess of book value over market value for which no provision has been made. The key update introduced by this circular is an exemption for the repurchase of State Development Loans (SDLs) by the concerned state government from being included in the aforementioned 5% cap, in addition to transactions already exempted. All commercial banks excluding Regional Rural Banks (RRBs) are subject to these guidelines. Contact information for the Department of Banking Regulation, Central Office, is provided: 12th Floor, Shahid Bhagat Singh Marg, Mumbai 400001; Tel No: 22601000; Fax No: 22705691; Email ID: cgmicdbr@rbi.org.in. The circular notes that the guidelines have been repealed and defers to the Reserve Bank of India Classification, Valuation and Operation of Investment Portfolio of Commercial Banks Directions, 2021.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also referred to as RBI.
Commercial Banks: Refers to all commercial banks excluding Regional Rural Banks (RRBs).
Reserve 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.
Held to Maturity (HTM): A category of investments held by banks.
DBR No BP.BC.621.04.141201516 dated July 1, 2015: Circular issued by Department of Banking Regulation, RBI on July 1, 2015 related to prudential norms for banks' investment portfolios.
State Development Loans (SDLs): Loans issued by state governments.
Saurav Sinha: Chief General Manager-in-Charge at Department of Banking Regulation, Reserve Bank of India
Mumbai, Maharashtra: Location of the Central Office, Department of Banking Regulation, 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.
भारतीय �रजव र् बक�
_________________RESERVE BANK OF INDIA _________________
www.rbi.org.in
RBI/2018-19/204
DBR.No.BP.BC.46/21.04.141/2018-19 June 10, 2019
All Commercial Banks
(excluding RRBs)
Dear Sir/Madam
Prudential Norms for Classification, Valuation and Operation of Investment
Portfolio by Banks - Sale of investments held under Held to Maturity (HTM)
category
Please refer to our circular DBR No BP.BC.6/21.04.141/2015-16 dated July 1, 2015,
advising banks that if the value of sales and transfer of securities to / from HTM
n
category exceeds 5 per cent of the book value owf investments held in HTM category
a
at the beginning of the year, banks should disclose the market value of the
r
d
investments held in the HTM category and indicate the excess of book value over
h
market value for which provision is nott made.
i
W
2. Apart from transactions that are already exempted from inclusion in the 5 per cent
cap, it has been decided that repurchase of State Development Loans (SDLs) by the
concerned state government shall also be exempted.
Yours faithfully,
(Saurav Sinha)
Chief General Manager-in-Charge
ब��कंग �व�नयमन �वभाग, केन्द्र�य कायार्लय, 12वीं मंिज़ल, शह�द भगत �सहं माग,र् मुंबई – 400001
Department of Banking Regulation, Central Office, 12th Floor, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22601000 Fax No: 22705691 Email ID: cgmicdbr@rbi.org.in