Recapitalisation bonds to face mark-to-market provision, says RBI

The RBI also said that, 'investments classified under HTM shall be carried at acquisition cost, with the premium over the face value being amortised over the tenor of the instrument'

The Reserve Bank of India (RBI) has said that banks that have received recapitalisation bonds from the government in 2021-22 should recognise these bonds at market value. This means that banks have to make a  mark-to-market (MTM) provision if their market value falls below the acquisition value.

“It is clarified that investments in special securities received from the government of India towards bank’s recapitalisation requirement from FY2021-22 onwards shall be recognised at fair value /market value on initial recognition in HTM,” the banking regulator said in a notification.

“The fair value/market value of these securities shall be arrived on the basis of