Accounting Procedure for Investments – Settlement Date Accounting

Last updated: 11 November 2010

Notice Date : 04 November 2010

Accounting Procedure for Investments – Settlement Date Accounting

RBI/2010-11/264

DBOD No. BP.BC. 58/21.04.141/2010-11

November 4, 2010

The Chairmen and Managing Directors/

Chief Executive Officers of

All Commercial Banks

(excluding Regional Rural Banks)

Dear Sir,

Accounting Procedure for Investments – Settlement Date Accounting

In terms of paragraph 1.1 (i) (d) of Master Circular No. DBOD. BP. BC.18/21.04.141/2010-11 dated July 1, 2010 on ‘Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks’ all the transactions put through by a bank, either on outright basis or ready forward basis and whether through the mechanism of Subsidiary General Ledger (SGL) Account or Bank Receipt (BR), should be reflected on the same day in its investment account and, accordingly, for SLR purpose, wherever applicable.

2. In this connection, it has come to our notice that the banks are not following a uniform methodology of accounting for investments in Government securities i.e. they follow either ‘Trade Date’ or ‘Settlement Date’ accounting. With a view to bringing in uniformity, it has been decided that banks should follow ‘Settlement Date’ accounting for recording purchase and sale of transactions in Government securities.

3. It is advised that these instructions will be applicable from January 1, 2011.

Yours faithfully,

(B. Mahapatra)

Chief General Manager-in-Charge