What changed
The earlier circular allowed PDs to classify a portion of their government securities as HTM only until March 31, 2010. This new circular removes that sunset date, permitting continued HTM classification until further advice. No other conditions from the August 2009 circular have been altered.
What it means for you
Standalone PDs get ongoing flexibility to manage their investment portfolio without the pressure of a fixed HTM deadline, reducing mark-to-market volatility on those securities. Banks that conduct PD activities departmentally must still follow standard bank investment classification rules, not this PD-specific relaxation.
What you must do
- Update internal investment classification policies for standalone PDs to reflect indefinite HTM eligibility for government securities.
- Ensure all other conditions from the August 31, 2009 circular (RBI/2009-10/136) remain in force and are complied with.
- For banks with departmental PD operations, continue applying the existing bank-level guidelines for investment portfolio classification and valuation.
Who it affects
Standalone Primary Dealers, Banks undertaking PD activities departmentally
Does this circular change any conditions from the August 2009 circular?
No. Only the expiry date (March 31, 2010) has been removed. All other conditions from the earlier circular continue to apply unchanged.
Are banks that do PD work departmentally covered by this relaxation?
No. Banks undertaking PD activities departmentally must continue to follow the standard investment classification and valuation guidelines issued by RBI's Department of Banking Operations and Development.