Home › Circulars › RBI/2009-10/422

Infra Bonds Allowed Under HTM: RBI 2010 Circular

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2009-10/422 · issued 23 Apr 2010 · ~2 min read

Quick answerRBI allowed banks to classify investments in long-term bonds (min 7-year residual maturity) issued by infrastructure companies under HTM, exempt from the 25% HTM ceiling. This eased capital requirements and encouraged infra lending.

The rule, in the simplest words

Banks can put long‑term infrastructure bonds (at least 7 years left until they end) in the Held‑to‑Maturity (HTM) bucket, and these bonds do NOT count toward the usual 25% limit on HTM investments.
Only scheduled commercial banks (not regional rural banks) can use this rule, and the bond must be issued by a company that really does infrastructure work.
The rule started on 23 April 2010, so any qualifying infra bond held after that date can be classified as HTM to avoid daily price changes and lower capital charges.

How it plays out — a real example

Anita, a senior treasury officer in Indore, reviews the bank’s portfolio and sees a 9‑year bond issued by a highway‑building company. Because the bond still has more than seven years to mature, she moves it into the HTM category, which lets the bank keep it without it counting toward the 25% HTM ceiling, making the bank’s capital position stronger.

What changed

Previously, only SLR securities and specific non-SLR items (like recap bonds, RIDF deposits) could be held in HTM beyond the 25% cap. This circular added long-term infrastructure bonds (min 7-year residual maturity) to the list of non-SLR securities eligible for HTM classification without counting toward the 25% ceiling. The change was effective from April 23, 2010.

What it means for you

Banks can now park long-term infra bonds in HTM, avoiding mark-to-market volatility and reducing capital charge on these investments. This encourages banks to fund infrastructure projects without worrying about interest rate risk on their investment book. However, banks must ensure the bonds meet the 7-year residual maturity condition and are issued by companies genuinely engaged in infrastructure activities.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Review your current HTM portfolio to identify infra bonds that qualify under the new exemption.
Ensure all infra bonds classified under HTM have a minimum residual maturity of seven years at the time of classification.
Update internal investment policy and reporting systems to reflect the new HTM eligibility for infra bonds.
Train treasury and compliance teams on the revised HTM classification rules to avoid misclassification.

Who it affects

Treasury departments of all scheduled commercial banks (excluding RRBs), Credit teams handling infrastructure project financing, Risk management teams monitoring investment portfolio classification, Compliance officers ensuring adherence to RBI prudential norms

❓ Common questions

Regulatory timeline

Stated effective date effective from April 23, 2010
Decoded by BankPulse 2026-06-19 06:39 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this circular allow all non-SLR bonds to be classified under HTM?

No, only long-term bonds (minimum residual maturity of seven years) issued by companies engaged in infrastructure activities are eligible. Other non-SLR securities remain ineligible for fresh HTM classification, except for recap bonds, equity in subsidiaries/joint ventures, and RIDF/SIDBI/RHDF deposits.

Will infra bonds classified under HTM count toward the 25% ceiling?

No, these bonds are explicitly exempt from the 25% of total investments ceiling for HTM, similar to recap bonds and RIDF deposits. They are counted separately.

What happens if an infra bond's residual maturity falls below seven years after classification?

The circular does not address post-classification maturity changes. Typically, once classified under HTM, the bond remains there until maturity, but banks should consult RBI for any reclassification if the issuer's status changes.

📜 Read the original circular — full text as issued by RBI

The guidelines have been repealed. Please refer to the Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of Commercial Banks) Directions, 2021 .
 RBI/2009-10/422 
 DBOD.No.BP.BC.  97/ 21.04.141/ 2009-10 
 April 23, 2010 
 All Scheduled Commercial Banks
 (excluding RRBs )
 Dear Sir,
 Classification of investments by banks in Bonds issued by Companies engaged in Infrastructure activities 
 Please refer to paragraph 66 of the Annual Policy Statement for the year 2010-11 ( extract enclosed ) wherein it has been proposed to allow banks to classify their investments in non-SLR long term bonds issued by companies engaged in infrastructure activities under HTM category.
 2. In terms of paragraph 2.1 (ii), 2.1 (iv) and 2.1 (v) of our Master Circular No. DBOD.BP.BC.3/21.04.141/2009-10 dated July 1, 2009 on ‘Prudential norms for classification, valuation and operation of investment portfolio by banks’, the norms for classification of investments under ‘Held to Maturity’ have been prescribed. It has now been decided that any investment by scheduled commercial banks in the long-term bonds issued by companies engaged in executing infrastructure projects and having a minimum residual maturity of seven years may be classified under HTM category. The modified composition of HTM category is given in Annex . 
 Yours faithfully
 (B.Mahapatra)
 Chief General Manager 
 Annex 
 Paragraphs 2.1 (i). (ii), (iii), (iv) and (v) of Master Circular No.DBOD.BP.BC.3/21.04.141/2009-10 dated July 1, 2009 on ‘Prudential norms for classification, valuation and operation of investment portfolio by banks’ as modified. 
 2.1 Held to Maturity 
 i)  The securities acquired by the banks with the intention to hold them up to maturity will be classified under 'Held to Maturity (HTM)'.
 ii) Banks are allowed to include investments included under HTM category up to 25 per cent of their total investments. 
 The following investments are required to be classified under HTM but are not accounted for the purpose of ceiling of 25 per cent specified for this category:
 Re-capitalisation bonds received from the Government of India towards their recapitalisation requirement and held in their investment portfolio. This will not include re-capitalisation bonds of other banks acquired for investment purposes. 
 Investment in subsidiaries and joint ventures (A Joint Venture would be one which the bank, along with its subsidiaries, holds more than 25 percent of the equity).
 Investment in the long-term bonds (with a minimum residual maturity of seven years) issued by companies engaged in infrastructure activities. 
 iii) Banks are, however, allowed since September 2, 2004 to exceed the limit of 25 percent of total investment under HTM category provided:
 (a)    the excess comprises only of SLR securities, and

 (b)    the total SLR securities held in the HTM is not more than 25 percent of their DTL as on the last Friday of the second preceding fortnight.
 iv) The non-SLR securities, held as part of HTM as on September 2, 2004 may remain in that category. No fresh non-SLR securities, are permitted to be included in HTM, except the following:
 Fresh re-capitalisation bonds, received from the Government of India, towards their re-capitalisation requirement and held in their investment portfolio. This will not include re-capitalisation bonds of other banks acquired for investment purposes.
 Fresh investment in the equity of subsidiaries and joint ventures.
 RIDF / SIDBI / RHDF deposits.
 Investment in long-term bonds (with a minimum residual maturity of seven years) issued by companies engaged in infrastructure activities. 
 (v) To sum up, banks may hold the following securities under HTM:
 SLR Securities up to 25 percent of their DTL as on the last Friday of the second preceding fortnight.
 Non-SLR securities included under HTM as on September 2, 2004.
 Fresh re-capitalisation bonds received from the Government of India towards their re-capitalisation requirement and held in Investment portfolio.
 Fresh investment in the equity of subsidiaries and joint ventures.
 RIDF / SIDBI / RHDF deposits.
 Investment in long-term bonds (with a minimum residual maturity of seven years) issued by companies engaged in infrastructure activities. 
 Extract of paragraph 66 of the Annual Policy Statement for the year 2010-11 
 66.    At present, banks’ investments in non-SLR bonds are classified either under held for trading (HFT) or available for sale (AFS) category and subjected to ‘mark to market’ requirements. Considering that the long-term bonds issued by companies engaged in infrastructure activities are generally held by banks for a long period and not traded and also with a view to incentivising banks to invest in such bonds, it is proposed:
 to allow banks to classify their investments in non-SLR bonds issued by companies engaged in infrastructure activities and having a minimum residual maturity of seven years under the held to maturity (HTM) category.

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/422 · issued 23 Apr 2010. The plain-English explanation above is BankPulse’s own independent summary.

🧰 Tools — save, print, templates & related

Most relevant forTreasury Team / ALM Compliance Team Risk Management Internal Audit Senior Management / Board Data Science / Analytics

🛠 Banker’s toolkit — checklists & reply templates →

Related circulars · Department of Regulation

SFB Pillar 3 Disclosure Norms Aligned with Basel UCB Deposit Rate Disclosure & Uniformity Rules Updated LAB Deposit Rate Disclosure & Uniformity Rules Tightened Payments Banks: Interest Rates Must Match Disclosed Schedule RBI Updates Bulk Deposit Rate Rules and Disclosure Timing

Browse all departments →

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…

BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5620&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.