Investments in special-secs for bank’s recapitalization to be recognized at market value: RBI

  • News|Blog|FEMA & Banking|
  • < 1 minute
  • By Taxmann
  • |
  • Last Updated on 2 April, 2022

investment for bank recapitalization; RBI news;

Circular no. RBI/2021-22/191 DOR.MRG.REC.98/21.04.141/2021-22, Dated: 31.03.2022

The RBI has clarified w.r.t Master Direction on Classification, Valuation, and Operation of Investment Portfolio of Commercial Banks (Directions), 2021. RBI clarified that the investments in special securities received from the Govt. towards bank’s recapitalization requirement from FY 2021-22 onwards shall be recognized at fair value on initial recognition in ‘Held to Maturity (HTM). This circular is applicable to all Commercial Banks (excluding Regional Rural Banks).

As per Section 9 of the Master Direction, investments classified under HTM shall be carried at acquisition cost, with the premium over the face value being amortised over the tenor of the instrument. It is expected that the acquisition of such instruments shall be at the fair value of the security at the time of its acquisition. This instruction also applies to re-capitalization bonds received from the Government of India towards banks’ recapitalisation requirements and held in the investment portfolio

The market value of these securities shall have arrived based on the YTM of similar tenor Central Government securities put out by Financial Benchmarks India Pvt. Ltd. (FBIL). Any difference between the acquisition cost and fair value arrived as above shall be immediately recognized in the Profit and Loss Account.

Click Here To Read The Full Notification

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied