Wednesday, March 05, 2025 | 11:12 PM ISTहिंदी में पढें
Business Standard
Notification Icon
userprofile IconSearch

RBI to address concerns on new HTM bond order

Image

Abhijit LeleSidhartha Mumbai/ New Delhi

The Reserve Bank of India has said it will address the concerns that banks have on the recent directive on sale of bonds in the held-to-maturity (HTM) category that are free from mark-to-market accounting rules.

“If there is a need, we will clarify on the matter,” Deputy Governor Usha Thorat said after a meeting of public sector bank chiefs convened by Union finance minister Pranab Mukherjee yesterday.

Banks can keep securities in the HTM category only up to 25 per cent of their net demand and time deposits. These securities remain in their portfolio till maturity, so banks do not have to follow mark-to-market accounting (revaluing assets to reflect current value) and make provisions if the value of the security changes.

 

When banks buy a government bond, they classify it into three categories — trading, available for sale (AFS) or HTM. If a security in the trading portfolio is not traded for 90 days, it has to be shifted to AFS. But the RBI expects banks to shift securities from AFS to HTM or vice versa at the start of the year and with prior permission of the bank’s board or the investment or asset-liability committees.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Aug 16 2010 | 12:38 AM IST

Explore News