While a detailed operational circular on valuation of securities is yet to come through from the central bank, senior bankers said that "it is imminent that the RBI will indicate a minimum mark for valuation of bank's non-SLR portfolio, and then leave it to the banks to decide at their discretion whether to have a higher mark-up in case they want to be more prudent". Earlier too, there was a mark-up that the RBI indicated over the end-March YTM that it declared for valuation of state government and government-guaranteed loans, state-run and private-sector unit bonds.

The mark-up was 25 basis points for state and government-guaranteed loans, but there was no such thing for state-run or private sector units. This time around though, the mark-up and a conservative one that banks may use will taken into account rating, tenor and standing of the unit concerned, like say, parentage. Further, Fimmda will work out the details of the methodology to value non-SLR securities along with the Primary Dealers Association of India (PDAI). "It is a complex issue, but Fimmda will have to work on it", a senior dealer said.

Quite a few banks are being held up in finalising their half-yearly balance-sheets as they still awaiting RBI's operational guidelines on valuation of securities, especially on the non-SLR portfolio. Of particular interest to bankers is a clarification on "investments in debentures, which are deemed to be in the nature of advances will be held under `hold-to-maturity' category: as to what nature of investments will be deemed so?

In the recent monetary and credit policy review, the RBI had made it clear that henceforth quarterly YTM quotations will be provided by Fimma and PDAI. "Categorisation and valuation of bank's investments will now have to be as per YTM quotes jointly put out by Fimmda with the Primary Dealers Association of India (PDAI)", RBI said. Valuation of other unquoted non-statutory liquidity ratio (non-SLR) securities wherever linked to the YTM rates will also be with reference to the YTM rates as put up by Fimmda and PDAI, the central bank said.