| Date: |
03-05-2002
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| Notification No: |
RBI Notification No 99/2002
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| Issuing Authority: |
RBI
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| Type: |
Notification
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| File No: |
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| Subject: |
Monetary and Credit Policy 2002- 03 Investment Fluctuation Reserve
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Monetary and Credit Policy 2002- 03 Investment Fluctuation Reserve
DBOD
No. BP. BC 99 - 21.01.002 - dated 3rd May 2002
Please
refer to paragraph 134 of the "Statement on Monetary and Credit Policy for
the year 2002-03" on Investment Fluctuation Reserve (IFR) enclosed to
Governor's letter No. MPD.214/07.01.279/2001-02 dated April 29, 2002.
2.
With a view to building up of adequate reserves to guard against any
possible reversal of interest rate environment in future due to unexpected
developments, banks were advised vide our circular DBOD No. BP.BC.57/ 21.04.048/
2001-02 dated January 10, 2002, to build up an IFR of a minimum 5.0 per cent of
the investment portfolio within a period of 5 years. However, banks were given
the freedom to build up IFR to a maximum of 10.0 per cent of the portfolio
depending on the size and composition of their portfolio, with the approval of
their Board. On the basis of feedback received from banks, it has been decided
that IFR should be computed with reference to investments in two categories,
viz., �Held for Trading� and �Available for Sale�. Thus, it will not be
necessary to include the investment under �Held to Maturity� category, which
is not meant to be traded, for purposes of computation of IFR.
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