The Reserve Bank of India through circular dated August 25, 2021 has issued Master Direction – Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2021. These Directions shall apply to all Commercial Banks, Small Finance Banks and Payments Banks (excluding RRBs). These Banks shall adopt a comprehensive investment policy duly approved by the Board of Directors.
The investment policy shall lay down prudential limits for investment in securities including those on private placement basis, sub-limits for PSU bonds, corporate bonds, guaranteed bonds, issuer ceiling, etc. Banks shall ensure that the investments by them in issues through private placement, do not give rise to systemic concerns.