However banks will not be allowed to sell more than 5% of their investments in this class per year, barring specified exceptions, under the proposed rules.
India’s Central bank has proposed changes to the valuation of bank investments, including relaxing rules for a vital class of long-term investments that are safeguarded from frequent valuation changes, yet fixing those on shifting securities between classes. A Reserve Bank of India conversation paper delivered late Friday recommends eliminating covers on the Held-To-Maturity (HTM) class of securities, and permitting more kinds of instruments to be held inside them.
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The discussion paper proposed that the suggested framework come into effect from April 1, 2023.
It also recommended that the local accounting watchdog update its current strict rules on the treatment of derivatives, which the central bank will then ask banks to follow. The paper noted that current rules may have stunted the development of the rates and credit derivative markets.
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