Prudential Norms for Investment Portfolio by FIs
The Reserve Bank of India (RBI) has issued a master circular outlining prudential norms for the classification, valuation, and operation of investment portfolios by Financial Institutions (FIs).
The circular aims to ensure that FIs maintain a robust investment policy, with clear objectives and guidelines for investments in various securities.
Investment Policy
The investment policy should have clear objectives, including ready forward contracts, which are eligible for FIs with a minimum net worth of ₹500 crore.
There are restrictions on ready forward contracts, including a maximum tenure of 11 months and a minimum deal size of ₹5 crore.
FIs must also comply with operational guidelines for transactions in government securities, including those conducted through SGL accounts and stock exchanges.
Investments in Non-Government Debt Securities
The circular covers investments in non-government debt securities, including rated and unrated securities, listed debt securities, and non-performing investments (NPIs).
FIs must comply with regulatory requirements, internal assessments, and prudential limits for these investments.
The Board of Directors plays a crucial role in overseeing the investment portfolio and ensuring compliance with these norms.
Chat with the Master Circular: