RBI/2009-10/423
DBOD.No.BP.BC.98/ 21.04.141/2009-10
April 23, 2010
All Scheduled Commercial Banks
(excluding RRBs )
Dear Sir,
Investment in Unlisted Non-SLR Securities
Please refer to paragraphs 67 and 68 of the Annual Policy Statement for the year
2010-11 (extract enclosed) regarding investment in unlisted non-SLR debt
securities (both primary and secondary market) by banks.
- In terms of paragraph 1.2.10 of the Master Circular
No.DBOD.BP.BC.3/21.04.141/2009-10 dated July 1, 2009 on Prudential norms for
classification, valuation and operation of investment portfolio by banks, bank’s
investment in unlisted non-SLR securities should not exceed 10 per cent of its
total investment in non-SLR securities as on March 31, of the previous year.
Further, in terms of our Circular No. DBOD. BP.BC.56/21.04.141/2007-08 dated
December 6, 2007, banks have been allowed to invest in unrated bonds of
companies engaged in infrastructure activities within the ceiling of 10 per cent
of unlisted non-SLR securities.
- Since there is a time lag between issuance and listing of securities, which
are proposed to be listed but not listed at the time of subscription, banks may
not be able to participate in primary issues of non-SLR securities. In view of
the above it has now been decided that investment in non-SLR debt securities
(both primary and secondary market) by banks where the security is proposed to
be listed on the Exchange(s) may be considered as investment in listed security
at the time of making investment. However, if such security is not listed within
the period specified, the same will be reckoned for the 10 per cent limit
specified for unlisted non-SLR securities. In case such investments included
under unlisted non-SLR securities lead to a breach of the 10 per cent limit, the
bank would not be allowed to make further investment in non-SLR securities (both
primary and secondary market) as also in unrated bonds issued by companies
engaged in infrastructure activities till such time bank’s investment in
unlisted non-SLR securities comes within the limit of 10 per cent.
Yours faithfully
(B.Mahapatra)
Chief General Manager
Extract of paragraphs 67 and 68 of the Annual Policy Statement for the year
2010-11
67. In terms of extant instructions, banks’ investments in unlisted non-SLR
securities should not exceed 10 per cent of their total investments in non-SLR
securities as on March 31 of the previous year. Since there is a time lag
between issuance and listing of security, banks may not be able to participate
in primary issues of non-SLR securities, which are proposed to be listed but not
listed at the time of subscription. In view of the above, it is proposed that:
* investment in non-SLR debt securities (both primary and secondary market) by
banks where the security is proposed to be listed on the Exchange(s) may be
considered as investment in listed security at the time of making investment.
68. If such security, however, is not listed within the period specified, the
same will be reckoned for the 10 per cent limit specified for unlisted non-SLR
securities. In case such investment included under unlisted non-SLR securities
lead to a breach of the 10 per cent limit, the bank would not be allowed to make
further investment in non-SLR securities (both primary and secondary market,
including unrated bonds issued for financing infrastructure activities) till
such time the limit is reached.