What changed
This circular updates the previous master circular dated July 1, 2011, by incorporating all instructions and guidelines issued between July 1, 2011, and June 30, 2012. It consolidates the updated norms into a single annex with an appendix listing all referenced circulars.
What it means for you
Banks must align their investment policies and practices with the updated prudential norms, including classification, valuation, and operational aspects. The circular reinforces the need for robust internal controls, proper reconciliation, and adherence to valuation standards for SLR and non-SLR securities.
What you must do
- Review and update your bank's internal investment policy to align with the updated master circular.
- Ensure proper classification of investments into HTM, AFS, and HFT categories as per the norms.
- Implement valuation guidelines for all securities, including unquoted SLR and non-SLR instruments.
- Strengthen internal control systems and audit processes for investment transactions.
Who it affects
All commercial banks (excluding Regional Rural Banks), Treasury and investment departments, Risk management and compliance teams, Internal audit and board-level committees
Does this circular replace the 2011 master circular?
Yes, this circular updates and supersedes the master circular dated July 1, 2011, by incorporating all guidelines issued up to June 30, 2012.
Are Regional Rural Banks covered under this circular?
No, this circular explicitly excludes Regional Rural Banks from its scope.
What is the key focus of the updated norms?
The norms focus on classification of investments into HTM, AFS, and HFT categories, valuation methods for various securities, and operational guidelines including internal controls and broker engagement.