No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2010-11/153 · issued 06 Aug 2010 · ~1 min read
Quick answerRBI mandates that if banks sell or transfer over 5% of HTM book value in a year, they must disclose the market value and any unprovided shortfall in audited annual accounts.
The rule, in the simplest words
If a bank sells or moves more than 5% of its HTM (hold-to-maturity: bonds kept until they end) book value (the price written in the bank's books) in one year, it must tell everyone the market value (what the bonds are worth now) and any loss not yet covered.
Banks cannot sell HTM bonds just to make quick profits without telling the truth about their value.
The 5% is measured against the HTM book value at the start of the year.
This rule applies to all commercial banks except Regional Rural Banks (RRBs: banks in villages).
The disclosure must be in the 'Notes to Accounts' (a special section) of the bank's yearly audited financial statements.
How it plays out — a real example
A branch operations officer in Indore notices the treasury team sold 6% of the bank's HTM bonds this year to book a profit. She reminds them that now the bank must show the market value and any hidden loss in the annual report, so everyone knows the real picture.
What changed
RBI observed banks frequently selling HTM securities to book profits, contrary to the hold-to-maturity intent. It now requires disclosure in 'Notes to Accounts' when sales/transfers exceed 5% of HTM book value at year-start.
What it means for you
Banks can no longer freely trade HTM securities without transparency. Exceeding the 5% threshold triggers a disclosure obligation, revealing any hidden losses. This curbs profit-taking from HTM sales and reinforces the classification's purpose.
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
Monitor cumulative HTM sales and transfers against 5% of opening book value.
If threshold is breached, compute market value and excess of book over market for disclosure.
Include required disclosure in 'Notes to Accounts' of audited annual financial statements.
Ensure board approval for any HTM shifts, limited to once per accounting year.
Who it affects
All commercial banks (excluding RRBs), Treasury and investment departments, Finance and accounts teams handling disclosures
❓ Common questions
What triggers the disclosure requirement?
If the value of sales and transfers to/from HTM exceeds 5% of the book value of HTM investments at the beginning of the year.
What must be disclosed in the Notes to Accounts?
The market value of HTM investments and the excess of book value over market value for which no provision has been made.
Can banks still sell HTM securities?
Yes, but frequent sales to book profits are discouraged. Exceeding the 5% threshold requires additional disclosure in audited accounts.
📜 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/2010-11/153
DBOD. No. BP.BC. 34/21.04.141/2010-11
August 6, 2010
The Chairman and Managing Directors/
Chief Executive Officers of
All Commercial Banks
(excluding Regional Rural Banks)
Dear Sir
Sale of Investments held under Held to Maturity (HTM) category
In terms of our Master Circular No. DBOD.BP.BC.18/21.04.141/2010-11 dated July 1, 2010 on ‘Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks’, securities acquired by banks with the intention to hold them up to maturity may be classified under Held to Maturity (HTM) category. Banks are, however, allowed to shift investments to/from HTM with the approval of the Board of Directors once a year. Such shifting is normally allowed at the beginning of the accounting year and no further shifting to/from HTM is allowed during the remaining part of that accounting year.
2. In this connection, it has been observed that many banks are resorting to sale of securities held under HTM category, that too frequently, to take advantage of favourable market conditions and to book profits. It needs to be reiterated that securities under HTM category are intended to be held till maturity and accordingly are not required to be marked to market.
3. In view of above, it has been decided that if the value of sales and transfers of securities to/from HTM category exceeds 5 per cent of the book value of investments held in HTM category at the beginning of the year, bank should disclose the market value of the investments held in the HTM category and indicate the excess of book value over market value for which provision is not made. This disclosure is required to be made in ‘Notes to Accounts’ in banks’ audited Annual Financial Statements.
Yours faithfully,
(B. Mahapatra)
Chief General Manager –in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/153 · issued 06 Aug 2010. The plain-English explanation above is BankPulse’s own independent summary.
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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=5925&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.
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