**Summary:**
This Reserve Bank of India (RBI) circular (DBR.BP.BC.No.002/21.04.141/2018-19) dated July 27, 2018, addresses prudential norms for the classification, valuation, and operation of investment portfolios by banks and All India Financial Institutions, specifically concerning the valuation of State Development Loans (SDLs).
The circular implements the announcement made in the second Bimonthly Monetary Policy Statement for 2018-19, dated June 6, 2018, to value securities issued by each state government based on observed prices. Effective September 30, 2018, Financial Benchmarks India Pvt. Ltd. (FBIL) will provide prices for SDL valuation based on these principles, which banks must use from that date forward. Until September 30, 2018, banks are instructed to continue valuing SDLs as detailed in circular DBR.No.BP.BC.62/1.04.141/2015-16 dated July 1, 2015.
For further information, contact Saurav Sinha, Chief General Manager-in-Charge, 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.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for monetary policy and regulation of the banking system.
All India Financial Institutions: A broad category of financial institutions operating throughout India.
Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by banks: A set of guidelines and regulations governing how banks classify, value, and manage their investment portfolios.
State Development Loans: Securities issued by state governments in India to raise funds for development projects.
Financial Benchmarks India Pvt. Ltd.: An organization responsible for providing benchmark prices for financial instruments in India.
Mumbai, Maharashtra: City in India where the central office of the Department of Banking Regulation is located.
Saurav Sinha: Chief General Manager-in-Charge at the Reserve Bank of India.
Department of Banking Regulation: A department within the Reserve Bank of India responsible for regulating banking operations.
भारतीय �रजव र् बक�
_________________RESERVE BANK OF INDIA _________________
www.rbi.org.in
RBI/2018-19/28
DBR.BP.BC.No.002 /21.04.141/2018-19 July 27, 2018
All Banks and
All India Financial Institutions,
Dear Sir,
Prudential Norms for Classification, Valuation and
Operation of Investment Portfolio by banks –
Valuation of State Development Loans
Please refer to paragraph 2 of the Statement on Developmental and Regulatory
Policies, issued as part of the second Bi-monthly Monetary Policy Statement for
2018-19 dated June 06, 2018, wherein it was announced that securities issued by
each state government should be valued based on observed prices.
2. It has now been decided that securities issued by each state government,
i.e., State Development Loans (SDLs), shall be valued in a manner which would
objectively reflect their fair value based on observed prices/yields.
3. Financial Benchmarks India Pvt. Ltd. (FBIL) shall make available prices for
valuation of SDLs based on the above principles with effect from September 30,
2018 which should be used for valuation of SDLs from that date.
4. Till then banks shall continue to value SDLs as detailed in the circular
DBR.No.BP.BC.6/21.04.141/2015-16 dated July 1, 2015.
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