RBI/2018-19/205
DCBR.BPD.(PCB) Cir.No.10/16.20.000/2018-19
June
10, 2019
The Chief Executive Officers of
All Primary (Urban) Co-operative Banks
Madam / Dear Sir,
Sale of Securities held in Held
to Maturity (HTM) Category - Accounting treatment
Please refer to Para 16.2
of Master Circular
DCBR.BPD.(PCB).MC.No.4/16.20.000/2015-16 dated July 01, 2015 on
Investments by Primary (Urban) Co-operative Banks (UCBs) indicating that
securities acquired by banks with the intention to hold them up to maturity
will be classified under HTM category.
2. In this connection, it is
reiterated that UCBs are not expected to resort to sale of securities held
in HTM category. However, if due to liquidity stress, UCBs are required to
sell securities from HTM portfolio, they may do so with the permission of
their Board of Directors and rationale for such sale may be clearly
recorded. Profit on sale of investments from HTM category shall first be
taken to the Profit and Loss account and, thereafter, the amount of such
profit shall be appropriated to ‘Capital Reserve’ from the net profit for
the year after statutory appropriations. Loss on sale shall be recognized
in the Profit and Loss account in the year of sale.
Yours faithfully,
(Neeraj Nigam)
Chief General Manager
|