The Reserve Bank of India (RBI) on September 12, 2023, issued the Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of Commercial Banks) Directions, 2023, after considering the feedback received on the Discussion Paper (DP) dated January 14, 2022, proposing revisions to the current norms for the classification, valuation, and operation of investment portfolios of commercial banks.
The revised Directions include principle-based classification of investment portfolio, tightening of regulations around transfers to/from held to maturity (HTM) category and sales out of HTM, inclusion of non-SLR securities in HTM subject to fulfilment of certain conditions and symmetric recognition of gains and losses.
These Directions are expected to enhance the quality of banks' financial reporting, improve disclosures provide a fillip to the corporate bond market, facilitate the use of derivatives for hedging, and strengthen the overall risk management framework of banks.
The revised Directions shall apply to all commercial banks (excluding Regional Rural Banks) from the financial year commencing on April 1, 2024.
The Link for Directions - Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of Commercial Banks) Directions, 2023.
[Press Release: 2023-2024/910]
