Mumbai: The Reserve Bank of India (RBI) has told banks that, henceforth, they may not invest in non-rated non-statutory liquidity ratio (SLR) securities, and non-SLR securities of original maturity of less than one year, other than commercial papers and certificates of deposits.

The RBI has said that not only must banks undertake usual due diligence in respect of investments in non-SLR securities, but also ensure that they do not finance credit facilities for certain purposes that they have been prohibited from doing so, by way of funds raised through non-SLR securities.

As per the latest prudential guidelines, for banks' investment in non-SLR securities, RBI has said that while making fresh investments in non-SLR debt securities, banks should ensure that such investment are made only in listed debt securities of companies which comply with the Securities and Exchange Board of India (SEBI) guidelines stipulating full disclosures.

Banks' investment in unlisted non-SLR securities should not exceed 10 per cent of the total investment in non-SLR securities as on 31 March of the previous year. The unlisted non-SLR securities in which banks may invest up to the limits specified above should comply with the disclosure requirements as prescribed by SEBI for listed companies, the apex bank has said.