What changed
This master circular consolidates all previous instructions on investment portfolio norms for FIs up to June 30, 2010, replacing the earlier circular dated July 1, 2009. It includes updated guidelines on investment policy, internal controls, classification into three categories (HTM, AFS, HFT), valuation methods, and repo accounting.
What it means for you
FIs must align their investment operations with this consolidated framework, ensuring clear board-approved policies, robust internal controls, and proper classification and valuation of securities. The circular reinforces prudential norms to prevent irregularities in securities transactions, as highlighted by the Janakiraman Committee.
What you must do
- Review and update your FI's investment policy to comply with the consolidated master circular.
- Ensure proper classification of investments into Held to Maturity, Available for Sale, and Held for Trading categories.
- Strengthen internal control systems, including audit, review, and reporting of investment transactions.
- Adopt the prescribed valuation norms for all securities, including unquoted ones.
- Implement repo accounting as per the guidelines, including coupon and mark-to-market treatment.
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 master circular is dated July 1, 2010, and consolidates instructions up to June 30, 2010.
Which institutions are covered under this circular?
It applies to all-India financial institutions: Exim Bank, NABARD, NHB, and SIDBI.
What are the three categories for investment classification?
Investments must be classified as Held to Maturity, Available for Sale, or Held for Trading, with decisions made at acquisition.