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DBOD. No. BP. 45 / 21.04.141 / 2006-07
July 12, 2006
Chairmen / Chief Executive Officers
All Commercial Banks
(Excluding RRBs)
Draft revised guidelines on classification
and valuation of investments
While allowing banks to shift their investments
in SLR securities to the ‘Held to Maturity’ category in September 2004, they
were advised that the Reserve Bank of India is setting up an Internal Group
to review the existing guidelines on classification and valuation of investment
portfolio by banks and align them with the international best practices taking
into account the current level of risk management practices in banks in India.
An Internal Group was constituted to review the existing guidelines on classification
and valuation of investment portfolio by banks to align these with the Accounting
Standard proposed to be issued by ICAI as well as international standards. The
Group focused on dovetailing the provisions of IAS 39 with the prevailing prudential
guidelines relating to classification and valuation of investments, taking into
account the unique country-specific circumstances.
2. It was also indicated in Paragraph 175 of
the Annual Policy Statement for the year 2006-07 that the above report has been
referred to experts for comments and on the basis of the feedback received,
draft guidelines would be prepared and placed on the Reserve Bank’s website
for wider dissemination and comments.
3. The draft
guidelines were also submitted for feedback/ advice of the Standing Technical
Advisory Committee on Financial Regulation (STACFR). The draft guidelines have
been suitably modified in light of the feedback received from experts/ STACFR
and are being issued as a draft for feedback from all concerned. The draft will
be open for comments for a period of six weeks. Comments on the draft guidelines
may be addressed to the undersigned at the address given below.
Department of Banking Operations & Development
Reserve Bank of India,
12th floor, Central Office Building,
Shahid Bhagat Singh Marg,
Mumbai – 400 001
Yours faithfully,
(Prashant Saran)
Chief General Manager-in-Charge
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