What changed
This master circular consolidates all previous instructions on investment portfolio norms for FIs up to June 30, 2007, replacing the 2006 circular. It updates guidelines on investment policy, classification into Held to Maturity, Available for Sale, and Held for Trading categories, and valuation methods.
What it means for you
FIs must align their investment operations with the consolidated norms, ensuring robust internal controls and accurate valuation. The circular reinforces prudential standards to prevent irregularities, impacting how FIs manage securities transactions and report to RBI.
What you must do
- Review and update your FI's investment policy to comply with the consolidated norms.
- Ensure proper classification of investments into HTM, AFS, and HFT categories at acquisition.
- Strengthen internal control systems for audit, reporting, and broker dealings.
- Adopt prescribed valuation methods for unquoted securities and mark-to-market practices.
Who it affects
All-India Term Lending and Refinancing Institutions (Exim Bank, IFCI, IIBI, NABARD, NHB, SIDBI, TFCI), RBI compliance and risk management teams at these FIs
What is the effective date of this master circular?
The circular is dated July 2, 2007, and consolidates instructions up to June 30, 2007.
Does this circular apply to commercial banks?
No, it specifically applies to All-India Term Lending and Refinancing Institutions listed in the circular.
What are the key categories for investment classification?
Investments must be classified into Held to Maturity, Available for Sale, and Held for Trading categories at the time of acquisition.