INSUBCONTINENT EXCLUSIVE:
Bond yields have increased dramatically within the last year taking down bond costs as a result.Mumbai: The RBI (Reserve Bank of India) on
Friday relieved the provisioning norms for bond losses sustained by banks also in the first quarter ending June 30, allowing them to spread
these over 4 quarters or one year
In April, the Reserve Bank of India (RBI) permitted banks to top four quarters the provisioning for bond losses sustained in the third and
In view of the continuing increase in the yields on Government Securities, as likewise the insufficiency of time to construct financial
investment fluctuation reserve (IFR) for numerous banks, it has actually been decided to approve banks the choice to spread out provisioning
for their mark to market (MTM) losses on all investments held in AFS (available for sale) and HFT (held for trading) for the quarter ending
June 30, 2018 too, an RBI alert stated
The provisioning required may be spread similarly over approximately 4 quarters, beginning with the quarter ending June 30, 2018
The RBI, nevertheless, put particular conditions for banks that use the choice to spread out the provisioning for these 2 quarters.The banks
have actually been asked to make appropriate disclosures in their notes to accounts/quarterly results supplying details of the arrangements
for depreciation of the investment portfolio for the quarters ended December 2017 and March 2018 made during the quarter/year, and the
balance required to be made in the staying quarters
Yields have risen sharply within the in 2015 taking down bond rates as a result.Further, with a view to developing adequate reserves to
safeguard versus increase in yields in future, the regulator asked all banks to develop an IFR with effect from fiscal 2018-19
The reserve bank's move is created to reduce banks' losses and help increase their 4th quarter success, which has actually been majorly
affected by the non-performing assets, or bad loans, collected in the system that have crossed the shocking level of Rs 9 lakh crore.(This
story has not been modified by TheIndianSubcontinent personnel and is auto-generated from a syndicated feed.)
