abhishreshthaa
Abhijeet S
Classification and Valuation of Investments
From the year ending March 31, 2002 UCBs are required to classify their entire investment portfolio as on March 31, 2002 under three categories viz. ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’.
In the balance sheet, however, the investments will continue to be disclosed as per the existing classification.
The investments under the ‘Available for Sale’ and ‘Held for Trading’ categories should be periodically marked to market or at more frequent intervals.
The investments under the ‘Held to Maturity’ category need not be marked to market as in the case of ‘Permanent’ securities at present.
Classification of investments, shifting of investments among the three categories, valuation of the investments, methodology for booking profit / loss on sale of investments and providing for depreciation should be in accordance with the prescribed guidelines.
UCBs should formulate an investment policy with the approval of their board of directors to take care of the requirements on classification, shifting and valuation of investments under the revised guidelines.
Besides, the policy should adequately address risk-management aspects, ensure that the procedures to be adopted by UCBs under the revised guidelines are consistent, transparent and well documented to facilitate easy verification by inspectors and statutory auditors.
From the year ending March 31, 2002 UCBs are required to classify their entire investment portfolio as on March 31, 2002 under three categories viz. ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’.
In the balance sheet, however, the investments will continue to be disclosed as per the existing classification.
The investments under the ‘Available for Sale’ and ‘Held for Trading’ categories should be periodically marked to market or at more frequent intervals.
The investments under the ‘Held to Maturity’ category need not be marked to market as in the case of ‘Permanent’ securities at present.
Classification of investments, shifting of investments among the three categories, valuation of the investments, methodology for booking profit / loss on sale of investments and providing for depreciation should be in accordance with the prescribed guidelines.
UCBs should formulate an investment policy with the approval of their board of directors to take care of the requirements on classification, shifting and valuation of investments under the revised guidelines.
Besides, the policy should adequately address risk-management aspects, ensure that the procedures to be adopted by UCBs under the revised guidelines are consistent, transparent and well documented to facilitate easy verification by inspectors and statutory auditors.