This post was written by admin on October 26, 2009

NEW DELHI: The Reserve Bank of India (RBI) is not likely to raise the permissible limit on securities in the held-to-maturity (HTM) in its
quarterly monetary policy review on Tuesday, senior officials in finance ministry and RBI told ET.

Banks limit
A higher limit would have allowed banks to move more securities into this category at a time when interest rates are expected to move up. Banks are currently holding close to 28% of their net deposits and time liabilities as bonds.

finance minister confiramation

A senior finance ministry official also confirmed that the governor has expressed apprehensions about a hike in the cap for HTM category now. “The rbisB contention is that once the HTM limit is raised, the banks may buy more bonds for risk-free higher returns of above 7%. In a scenario where credit offtake is at a 12-year low this is not a desirable scenario,” said a senior finance ministry officia

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