Reserve Bank of India excludes mandated long-term non-financial bonds from All India Financial Institutions’ 25 percent HTM investment ceiling

The Reserve Bank of India has amended its 2023 prudential directions for All India Financial Institutions (AIFIs) to change how certain investments are counted against the 25 percent ceiling for investments classified as Held to Maturity (HTM). Under the amendment, AIFIs’ statutory mandate-driven investments in long-term bonds and debentures issued by non-financial entities will not be included in calculating the 25 percent HTM limit. The exemption applies to long-term bonds and debentures with a minimum residual maturity of three years at the time of investment and is incorporated by amending paragraph 34.2.3, alongside the existing exclusions for investments specified in sub-sections 34.2.2(ii) and 34.2.2(iii). The change applies to the Export-Import Bank of India, the National Bank for Agriculture and Rural Development, the National Bank for Financing Infrastructure and Development, the National Housing Bank and the Small Industries Development Bank of India, and takes effect from April 1, 2025.