Mumbai, Sept. 16 The Reserve Bank of India may look at increasing the limit of the Held-to-Maturity portfolio of government bonds for banks, if it will help in the completion of the government borrowing programme, said Dr K.C. Chakrabarty, Deputy Governor, Reserve Bank of India. The department concerned was examining it, he added.
Speaking to reporters on the sidelines of a seminar on financial inclusion, organised by FINO, Dr Chakrabarty said, “The HTM issue has to be examined. Banks say they have reached the HTM limit.”
Currently, banks are allowed to hold up to 25 per cent of the government bonds portfolio under the HTM category. This means they need not mark to market the depreciation in the value of these bonds.
About increasing the HTM cap, Dr Chakrabarty said, “Globally HTM is not regulated. It is up to each player to decide. Here, we regulate it due a variety of reasons.”
He also said that the HTM provision did not change the financial strength of the bank’s balance-sheet, as it was only an accounting issue.
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