Business Daily from THE HINDU group of publications
Thursday, Sep 20, 2007
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Business Daily from THE HINDU group of publications Thursday, Sep 20, 2007 ePaper |
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Money & Banking
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Co-operatives Markets - Mutual Funds Web Extras - RBI & Other Central Banks Our Bureau Mumbai, Sept. 19 Urban co-operative banks (UCBs) will not be permitted to invest in units of mutual funds other than debt mutual fund and money market mutual funds, says a notification from the Reserve Bank of India. The central bank has further asked the UCBs to disinvest their existing holdings in any other such units (other than the ones mentioned above), including that in Unit Trust of India. “The RBI had earlier notified that the urban co-operative banks should not invest in mutual fund units of any fund house other than that of UTI, but with this recent notification, it is clear that the banks can now invest in debt and money market mutual funds of any fund house, including UTI,” said a senior official at a co-operative bank. He felt that banks were investing in units other than debt and money markets, which was prohibited by the RBI. “This notification makes it clear that UCBs cannot invest in equity or any other such units of any fund house,” he said. UCBs are permitted to invest in certain instruments, within an overall ceiling of 10 per cent of their deposits as on March 31 of the previous year. “ Non-Statutory Liquidity Ratio investments will continue to be limited to 10 per cent of a bank’s total deposits as on March 31 of the previous year,” said the notification. These banks will also not be permitted fresh investments in shares of all India financial institutions. “The existing share holding in these institutions may be phased out and till such time they are held in the books of the bank, they will be reckoned as Non-SLR investments,” the notification added. The investments will be limited to ‘A’ or equivalent rated Commercial Papers, debentures and bonds that are redeemable in nature. Investments in perpetual debt instruments will, however, not be permitted, the notification added. The fresh investments under Non-SLR category will have to be classified under Held for Trading (HFT) / Available for Sale (AFS) categories only and marked to market as applicable to these categories of investments. Investments in unlisted securities should not exceed 10 per cent of the total Non-SLR investments at any time. “Where banks have already exceeded the said limit, no incremental investment in such securities will be permitted,” said the RBI notification. More Stories on : Co-operatives | Mutual Funds | RBI & Other Central Banks
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