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4.2 Basis of classification:
4.2.1. Investments that the Bank intends to hold till maturity are classified as Held to
Maturity.
4.2.2. Investments that are held principally for resale within 90 days from the date of
purchase are classified as Held for Trading.
4.2.3. Investments, which are not classified in the above two categories, are classified as
Available for Sale.
4.2.4. An investment is classified as Held to Maturity, Available for Sale or Held for
Trading at the time of its purchase and subsequent shifting amongst categories is
done in conformity with regulatory guidelines.
4.3 Valuation:
4.3.1. In determining the acquisition cost of an investment:
Brokerage and/or commission received on subscriptions are reduced from the
cost.
Brokerage, commission, securities transaction tax, etc. paid in connection with
acquisition of investments are expensed upfront and excluded from cost.
Broken period interest paid / received on debt instruments is treated as interest
expense/ income and is excluded from the cost/sale consideration.
Cost is determined on the weighted average cost method for investments under
HTM, AFS and HFT category.
4.3.2. The transfer of a security from one category to another is accounted for at the
least of acquisition cost/book value/ market value on the date of transfer, and the
depreciation, if any, on such transfer is fully provided for.
4.3.3. Treasury Bills and Commercial Papers are valued at carrying cost.
4.3.4. Held to Maturity category:
Investments under Held to Maturity category are carried at acquisition cost unless
it is more than the face value, in which case the premium is amortized over the
period remaining maturity on constant yield basis. Such amortization of premium
is adjusted against income under the head “interest on investments”. Investments
Annual Report 2020-21 | 285
4.2.1. Investments that the Bank intends to hold till maturity are classified as Held to
Maturity.
4.2.2. Investments that are held principally for resale within 90 days from the date of
purchase are classified as Held for Trading.
4.2.3. Investments, which are not classified in the above two categories, are classified as
Available for Sale.
4.2.4. An investment is classified as Held to Maturity, Available for Sale or Held for
Trading at the time of its purchase and subsequent shifting amongst categories is
done in conformity with regulatory guidelines.
4.3 Valuation:
4.3.1. In determining the acquisition cost of an investment:
Brokerage and/or commission received on subscriptions are reduced from the
cost.
Brokerage, commission, securities transaction tax, etc. paid in connection with
acquisition of investments are expensed upfront and excluded from cost.
Broken period interest paid / received on debt instruments is treated as interest
expense/ income and is excluded from the cost/sale consideration.
Cost is determined on the weighted average cost method for investments under
HTM, AFS and HFT category.
4.3.2. The transfer of a security from one category to another is accounted for at the
least of acquisition cost/book value/ market value on the date of transfer, and the
depreciation, if any, on such transfer is fully provided for.
4.3.3. Treasury Bills and Commercial Papers are valued at carrying cost.
4.3.4. Held to Maturity category:
Investments under Held to Maturity category are carried at acquisition cost unless
it is more than the face value, in which case the premium is amortized over the
period remaining maturity on constant yield basis. Such amortization of premium
is adjusted against income under the head “interest on investments”. Investments
Annual Report 2020-21 | 285
