Beruflich Dokumente
Kultur Dokumente
:MUMBAI
:00/00/2013
:00
:Review and Revision of the Banks
Investment Policy
INTRODUCTION :
Urban Co-Operative Banks (UCBs) have registered perceptible growth in terms of
the number of banks, branch offices and volume of business. The deposits
mobilized by these banks assumed sizeable proportion of the total deposits of the
banking sector in India . Similarly , with the application of prudential norms,
increased trading in securities by these banks in terms of turnover and range of
instruments / maturities, it appears ,it became essential for the Reserve Bank of
India (RBI), in the interest of the depositors, to ensure that the said investment are
not fraught with undue risk. The RBI had, therefore , directed every UCB to put in
place with the approval of the Board of Directors (BOD), a clear cut investment
policy by taking into account its own internal requirements and extant statutory /
regulatory frame work and review it each year. Accordingly , the Bank has since
reviewed and revised its current investment policy (which was approved by the
BOD on 00/00/2013) to make it complaint with the RBI instructions contained in
the RBI Master Circular UBD BPD (PCB) MC No.12 dated July 1, 2011.
MAIN OBJECT:
The main object of the investment policy shall be to ensure that the Banks
investments / disinvestments are consistent with the extent statutory provisions as
well as regulatory instructions and are based on sound / acceptable banking as well
as debt market practices and shall have minimal risk and maximum profit.
INSTRUMENTS ELIGIBLE FOR INVESTMENTS :
The bank shall invest in / divest the following instruments (a) Central Government
Securities (b) State Government Securities (c) Approved Securities, wherein
payment of interest and repayment of principal is guaranteed by central or State
Government (d) Commercial Papers, Debentures, Bonds, Units of the debt mutual
funds and money market mutual funds provided they have A ` or equivalent and
higher rating (e) Deposits with other banks for the purposes approved ceiling
prescribed by the RBI (f) Shares of Co-operative institutions within the permissible
ceiling/norms as per extant statutory / regulatory rules.
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PURPOSE :
The Banks investment in the above mentioned instruments shall be for (a)
maintenance of SLR (b) trading in securities (c) earmarking towards reserve fund
etc. (d) Offering securities for financial accommodation and earning better return.
PRUDENTIAL LIMITS/NORMS
The Bank shall strictly observe various limits / norms etc. given here below while
effecting investments and / or divestments.
Sr. Item
No.
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SLR INVESTMENTS
Details
Not less than 25% of DTL further the
bank is required to maintain SLR in
G.Sec. and other Approved securities up
to 25% of its NDTL
Limited to 10% of the Banks deposits as
on March 31, of the pervious year subject
to prudential limits, exemptions and
restrictions etc. prescribed in the enclosed
RBI circular UBD BPD (PCB) MC.No.
12 dated 1 July 2011..
As per instruction contained in RBI
Master Circular No. 12 dated July 1,
2011. regarding eligible institutions and
the ceiling and sub ceiling on
investments in the shares of co-operative
institutions
Categorisation of Investments
Bank shall require to classify their entire investment portfolio (including
SLR and Non-SLR securities) under three categories viz.
Held to Maturity (HTM)
Available for Sale (AFS)
Held for Trading (HFT)
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Precise need
Description for investment / divestment
Competitive rates obtained form different sources
The use of services of the broker, if any.
Counter party details
Effect if any, on the Banks present / future profitability
Committee
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
Govt. security transaction shall be through CSGL A/c and non SLR
securities transactions shall be through the Banks DEMAT A/C.
Fund / stock position shall be ensured before structuring each deal.
The Bank, with the approval of the Board, shall prepare every year, a
list of approved brokers who are SEBI registered and are members of
BSE or NSE or OTCEL.
The services of the brokers shall only be used to bring two
parties together and not as counter parties.
A ceiling of 5% of total transactions (both sales and
purchases)
entered into the Bank during a year, shall be an
aggregate upper
contract limit for each of the approved brokers.
The Bank shall seek scheduled bank, a Primary Dealer, a Financial
Institution, an Urban co-operative Bank, Insurance Company, Mutual
Fund or Provident Fund as a counter party for SLR securities
transactions and commercial banks and PDs only for non-SLR
transactions.
The Bank shall take advantage of non-competitive bidding
facility provided by RBI for acquiring Govt. Securities in
primary auctions.
All security transactions entered during the month will be put up
to the Board of Directors for ratification every month. Further, the
Board shall effectively supervise the security trade operations.
The Bank shall meticulously follow other instructions issued by
RBI regarding categorization of the entire investment
portfolio,
shifting among different categories, valuation, provisioning /
amortization, accounting and reporting, vide its master circular UBD
BPD (PCB). MC No. 12 dated July 1, 2011.
Officials dealing with purchase/sale transactions shall be separate
from those responsible for settlement and accounting.
While buying securities for SLR purpose, the Bank shall ensure from
the counter parties concerned that the said securities / bonds have
and would continue to have SLR status. The Bank shall also verify
this from independent
source/s, in case of doubt.
The Bank shall seek the guidance of PDAI / FIMMDA on
investment in Government Securities.
Empanelment of Brokers
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4
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INTERNAL CONTROL :
The Bank shall exercise internal control as under :
(a)
(b)
(c)
(d)
(e)
Each transaction entered into, shall have a deal slip containing all
important details viz. description of the security, face value,
price,
maturity date, contract date and time, counter party to
the deal, use
of services of a broker, if any. The Bank shall have a system of issue
of confirmation to the counter party concerned.
The deal slips shall be serially numbered, controlled separately and
properly accounted for.
Complete record of all investment transactions shall be maintained
in a suitable register or in the suitable computerized e- form on the
basis of vouchers passed on verification of contract notes and deal
confirmations from the counter parties.
Separate record of broker wise details of deals, if any, shall be
maintained.
All securities transactions (SLR and non-SLR) shall be subjected to
internal audit on quarterly basis for the quarter ending June,
September, December and March every year.Further the said
auditors report shall be put up to the BOD within one month from
the respective quarter for information necessary action.
(f)
The above said auditors shall also certify that the investments held
by the Bank, as on the last reporting Friday of quarter and as
reported to the RBI are actually owned/held by it, as evidenced by the
physical securities and/or out-standings statement (holding
certificate).
The Bank shall undertake half yearly reviews, as on 30th September and 31st
March of the investment portfolio which shall comment on prudential, Operational
etc. aspects and clearly indicate about/ certify adherence to RBI guidelines on the
subject.
The said review shall be put up the Board of Directors within one month i.e. on or
before 30th April and 31st October every year.
The Bank shall also review the following aspects of Non- SLR investment at least
at half yearly intervals :
(a)
(b)
(c)
(d)
(e)
REPORTING :
The Bank shall submit the certificates and reports to the Reserve Bank of India, on
the stipulated dates :
(a) Quarterly Investment Holding certificates, duly certified by the Internal
Auditors, as on the last reporting Friday and as reported to the RBI are
actually owned/held by the bank as evidenced by the physical securities
and/or out-standings statement (holding certificate)
(b) Half yearly review reports as on 31st March and 30th September
every
year by 15th May and 15 November respectively.
REVIEW OF INVESTMENT POLICY:
The Bank shall review its investment policy every year to ensure that it is
complaint to its own internal requirements as well as to the statutory
provisions and regulatory instructions in force. During the said review of the
policy, the Bank shall also ensure that it provides for the nature and extent of
investment indented to be made in the permitted non-SLR investments, risk
parameters, cut loss limits for holding/ divesting them, proper risk
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