RBI – Inv Directions for Banks
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RBI – Inv Directions for Banks
Commercial banks’ regulatory guidelines on the classification and valuation of investment portfolios are primarily based on a framework introduced in October 2000, drawing upon the prevailing global practices and standards. Given significant developments in international reporting standards on classification, measurement, and valuation of investments, the RBI felt a need to review and update the existing norms. A discussion paper on this subject was issued for public comments on 14 January 2022.
Based on the inputs received on the discussion paper, the RBI has now introduced a revised regulatory framework (the ‘Directions’ or the ‘Circular’) for the investment portfolio, which all Banks, other than Regional Rural Banks, will need to comply with. These directions shall come into effect for the accounting period commencing on or after 1 April 2024.
In this Early Impressions publication , we have analyzed these Directions and have provided our perspective on specific accounting and reporting matters that will be relevant for Banks to consider as they assess and implement the requirements of these Directions. In summary, the directions would ensure that the investment classifications reflect the banks’ business models and that greater transparency would be achieved through the disclosures, explaining the details of the business models they adopted.
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