What changed
This master circular consolidates all previous instructions on investment portfolio norms for FIs up to June 30, 2008, into a single document. It updates the earlier master circular dated July 2, 2007, by incorporating subsequent circulars listed in Annex V.
What it means for you
FIs must now refer to this single master circular for all guidelines on classification, valuation, and operation of their investment portfolios, ensuring consistency and compliance. The circular reinforces the need for robust internal controls, proper categorization of investments (HTM, AFS, HFT), and adherence to valuation norms, impacting how FIs manage their securities portfolios.
What you must do
- Review and align your investment policy with the consolidated guidelines in this master circular.
- Ensure proper classification of all investments into Held to Maturity, Available for Sale, or Held for Trading categories at acquisition.
- Strengthen internal control systems for investment transactions, including audit and reporting mechanisms.
- Update your compliance framework to reference this master circular and withdraw reliance on older circulars listed in Annex V.
Who it affects
Exim Bank, NABARD, NHB, SIDBI, All-India Term Lending and Refinancing Institutions
What is the effective date of this master circular?
The circular is dated July 1, 2008, and consolidates instructions up to June 30, 2008.
Does this circular apply to commercial banks?
No, it applies only to the specified all-India Financial Institutions: Exim Bank, NABARD, NHB, and SIDBI.
What are the key areas covered in this master circular?
It covers investment policy, internal control systems, classification of investments into three categories, valuation norms, repo accounting, and hedging with interest rate derivatives.