labels: rbi, investment - general, mutual funds, banks & institutions
Banks can invest in debt fundsnews
In a release, the centra
12 December 2003
Mumbai: The Reserve Bank of India (RBI) has said banks can continue to invest in mutual funds units, which have fully invested in non-statutory liquidity ratio debt securities, listed or unlisted. They will, however, not be allowed to invest in mutual fund plans that invest more than 10 per cent of funds in unlisted securities from 1 January 2005.

In a release, the central bank said investment norms for non-statutory liquidity ratio (SLR) securities will be applicable to all types of bonds, including capital gains, bonds eligible for priority sector status, bonds issued by central or state-owned units, with or without government guarantees, and bonds issued by banks and financial institutions. The regulator had issued prudential limits on banks' investment in securities in a set of guidelines on 12 November.

The RBI said till the end of the current financial year, banks could continue to invest in unlisted securities issued on or before 30 November. From 1 April 2004, banks may invest in certain categories of unlisted securities until 31 December 2004, provided the issuers have applied to stock exchanges for listing and the security is rated minimum investment grade.

Till 31 December 2004, banks may also invest up to 10 per cent of incremental non-SLR investments in unlisted securities issued after November 30, 2003.

With effect from January 1, 2005, only banks whose investments in unlisted non-SLR securities are within the prudential limits prescribed in the guidelines may make fresh investments in such securities and only up to the prudential limits, the release stated.

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Banks can invest in debt funds