RBI released a circular on prudential norms for classification, valuation, and operation of investment portfolio by banks, with respect to sale of investments held under the Held to Maturity (HTM) category. The circular mentions that apart from transactions that are already exempted from inclusion in the 5% cap, it has been decided that repurchase of State Development Loans (SDLs) by the concerned state government shall also be exempted.
In July 2015, RBI released a circular advising banks that if the value of sales and transfer of securities to/from HTM category exceeds 5% of the book value of investments held in HTM category at the beginning of the year, banks should disclose the market value of the investments held in the HTM category and indicate the excess of book value over market value for which provision is not made.
Keywords: Asia Pacific, India, Banking, Securities, Held to Maturity, Sale of Investments, RBI
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