RBI increases limit of held-to-maturity securities for banks (2024)

FAQs

RBI increases limit of held-to-maturity securities for banks? ›

The RBI raised the cap on securities that can be included in the HTM category from 22% to 23% in April 2022. The central bank had stated at the time that the HTM limit would be gradually decreased from April to June of 2023 to 19.5% of net demand and time liabilities, which serves as a stand-in for deposits.

"The HTM limits would be restored from 23 percent to 19.5 percent in a phased manner starting from the quarter ending June 30, 2024," the RBI said in a release. Earlier this year, the central bank increased the limit to 23 percent from 22 percent earlier for securities that can be placed in the HTM category.

To avoid the recognition of future unrealized losses, many banks transferred (i.e., reclassified) available-for-sale (AFS) securities—which under GAAP are recognized at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (AOCI), a component of owners' equity—to held-to- ...

There will be no maximum limit for investment in the Bonds. 4. Tax Treatment: (i) Income-tax: Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bond holder.

Payment banks can take deposits up to Rs. 2,00,000. It can accept demand deposits in the form of savings and current accounts. The money received as deposits can be invested in secure government securities only in the form of Statutory Liquidity Ratio (SLR).

Held-to-maturity (HTM) securities are purchased to be owned until maturity. For example, a company's management might invest in a bond that they plan to hold to maturity. There are different accounting treatments for HTM securities compared to securities that are liquidated in the short term.

Specifically, he argues, banking authorities need to take a look at banks' application of the rules for marking assets as “hold to maturity,” meaning they have the intent and ability to let the securities mature and cash them out for full value.

NRIs can open an RBI retail direct account to invest in government securities (G-Secs), state development loans (SDLs), and treasury bills (T-bills). However, NRIs will not be able to invest in sovereign gold bonds (SGBs) and floating rate bonds through this avenue.

The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue.

As Government Bonds are long-term investment options with maturity tenure ranging from 5 – 40 years, it can lose relevancy over time.

What is the $3000 rule? ›

The regulation requires that multiple purchases during one business day be aggregated and treated as one purchase. Purchases of different types of instruments at the same time are treated as one purchase and the amounts should be aggregated to determine if the total is $3,000 or more.

You can generally deposit as much as you want at a bank or other financial institution, but some banks may have extra rules and restrictions due to federal law and bank policy. For example, ATMs can limit the amount of bills you can deposit.

The cash deposit limit in savings account as per income tax is Rs.10 Lakh during a financial year. All banks or financial institutions must declare large cash deposits according to Section 114B of the Income Tax Act, 1962.

The minimum average maturity period will be 3 years for ECB up to $ 50 million or equivalent and 5 years for ECB beyond $ 50 million or equivalent. For more information, click here.

Money market instruments have maturities that range from one day to one year, although they are most often three months or less.

In terms of para 5.2 of the circular, the sum of all the exposure values of a bank to a group of connected counterparties must not be higher than 25 percent of the bank's available eligible capital base at all times.