The securities acquired by the banks with the intention to hold them up to maturity will be classified under Held to Maturity (HTM).The investments included under “Held to Maturity” should not exceed 25 per cent of the bank’s total investments. The banks may include, at their discretion, under Held to Maturity category securities less than 25 per cent of total investment. The following investments will be classified under ‘Held to Maturity’ but will not be accounted for the purpose of ceiling of 25% specified for this category: a) Re-capitalisation bonds received from the Government of India towards their re-capitalisation requirement and held in their investment portfolio. This will not include re-capitalisation bonds of other banks acquired for investment purposes. b) Investment in subsidiaries and joint ventures. [A joint venture would be one in which the bank, along with its subsidiaries, holds more than 25% of the equity.]
c) The investments in debentures/ bonds, which are deemed to be in the nature of an advance. Banks are, however, allowed since September 2, 2004, to exceed the limit of 25 per cent of total investment under HTM category provided the excess comprises only of SLR securities; and the total SLR securities held in HTM is not more than 25 per cent of their DTL as on last Friday of the second preceding fortnight.
Profit on sale of investments in this category should be first taken to the Profit & Loss Account and thereafter be appropriated to the ‘Capital Reserve Account’. Loss on sale will be recognised in the Profit & Loss Account.
