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Master Circular – Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by FIs

RBI/2013-14/79
DBOD.No.FID.FIC.3/01.02.00/2013-14

July 1, 2013

The CEOs of the
All-India Term Lending and Refinancing Institutions
(Exim Bank, NABARD, NHB and SIDBI)

Dear Sir,

Master Circular – Prudential Norms for Classification,
Valuation and Operation of Investment Portfolio by FIs

Please refer to Master Circular DBOD.No.FID.FIC.3/01.02.00/2012-13 dated July 02, 2012 on the captioned subject. The enclosed Master Circular consolidates and updates all the instructions / guidelines on the subject up to June 30, 2013. The Master Circular has also been placed on the web-site of RBI (http://www.rbi.org.in).

2. It may be noted that the instructions contained in circulars listed in the Annex VIII have been consolidated in this master circular.

Yours faithfully,

(Rajesh Verma)
Chief General Manager

————————————————-

Master Circular – Prudential Norms for Classification,
Valuation and Operation of Investment Portfolio by FIs

Purpose

To provide a consolidated set of guidelines on Classification, Valuation and Operation of Investment Portfolio to all-India term-lending and refinancing institutions.

Previous instructions

The list of circulars containing previous instructions on the above subject is given in Annex VIII.

Application

To all the all-India Financial Institutions viz. Exim Bank, NABARD, NHB and SIDBI.

Structure

1

Introduction

2

Investment Policy

2.1

Objectives of Investments

2.2

Ready Forward Contracts

2.3

Transaction / Trading in Government Securities

2.4

Bank Receipts

2.5

Investments in Non-Government Debt Securities

3

Internal Control System

3.1

Guidelines for Internal Control System

3.2

Dealing through brokers

3.3

Audit, review and reporting of investment transactions

3.4

Monitoring of subsidiaries / mutual funds

4

Classification of Investments

4.1

Three Categories

4.2

Decision of category at the time of acquisition

4.3

Held to Maturity

4.4

Available for Sale & Held for Trading

4.5

Shifting among categories

5

Valuation of Investments

5.1

Held to Maturity

5.2

Available for Sale

5.3

Held for Trading

5.4

General

5.5

Market Value

5.6

Valuation of unquoted securities

6

Conversion of Debt into Equity and Other Instruments in Case of Restructured Accounts

7

Hedging of investments with Exchange Traded Interest Rate Derivatives

8

Repo Accounting

8.1

Coupon

8.2

Repo Interest Income / Expenditure

8.3

Marking to Market

8.4

Book value on Re-purchase

8.5

Disclosure

8.6

Accounting Methodology
Annex – I
Annex – II
Annex – III
Annex – IV
Annex – V
Annex VI
Annex VII
Annex – VIII

Tags: EXIM bankIndiaMaster CircularNational Bank for Agriculture and Rural DevelopmentRajesh VermaReserve Bank of IndiaSmall Industries Development Bank of IndiaValuation

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