Master Direction – Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023
The Reserve Bank of India has issued directions for the classification, valuation, and operation of investment portfolios of commercial banks. These directions are applicable to all commercial banks, including regional rural banks and local area banks.
The directions define various terms related to investment portfolios, including “active market”, “approved securities”, “associate”, “carrying cost”, and “fair value”, among others.
The directions also outline the classification of investments into different categories, such as “held to maturity”, “available for sale”, and “held for trading”. Additionally, they provide guidelines for the valuation of investments, including the use of fair value and amortized cost methods.
The directions also cover the operation of investment portfolios, including the management of risks, the maintenance of records, and the reporting requirements.
The directions are effective from the date of issuance and are applicable to all commercial banks in India.
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