Valuation of Securities
Valuation of securities:
RBI has issued guidelines for valuing both the quoted and unquoted securities.
Valuation of Quoted Securities:
The market value for the purpose of periodical valuation of investments included in the Available for Sale and the Held for trading categories would be the market price of the scrip from any of the following sources:
• Quotes/Trades on the Stock exchanges
• SGL Account transactions
• Price list of RBI
• Prices declared by Primary Dealers Association of India (PDAI) jointly with FIMMDA
Valuation of Unquoted SLR Securities:
Central Govt. Securities should be valued on the basis of the prices/ YTM rates put out by the PDAI/ FIMMDA at periodical intervals. The 6.00 per cent Capital Indexed Bonds may be valued at “cost” and Treasury Bills should be valued at carrying cost.
State Government securities as well as the other approved securities will be valued applying the YTM method by marking it up by 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI/ FIMMDA periodically.
Valuation of Unquoted Non-SLR Securities:
DEBENTURES/BONDS:
All debentures/ bonds other than debentures/ bonds which are in the nature of advance should be valued on the YTM basis. Such debentures/ bonds may be of different companies having different ratings. These will be valued with appropriate mark-up over the YTM rates for Central Government securities as put out by PDAI/ FIMMDA periodically. The mark-up will be graded according to the ratings assigned to the debentures/ bonds by the rating agencies subject to the following:
• The rate used for the YTM for rated debentures/ bonds should be at least 50 basis points above the rate applicable to a Government of India loan of equivalent maturity.
• The rate used for the YTM for unrated debentures/ bonds should not be less than the rate applicable to rated debentures/ bonds of equivalent maturity. The mark-up for the unrated
RBI has issued guidelines for valuing both the quoted and unquoted securities.
Valuation of Quoted Securities:
The market value for the purpose of periodical valuation of investments included in the Available for Sale and the Held for trading categories would be the market price of the scrip from any of the following sources:
• Quotes/Trades on the Stock exchanges
• SGL Account transactions
• Price list of RBI
• Prices declared by Primary Dealers Association of India (PDAI) jointly with FIMMDA
Valuation of Unquoted SLR Securities:
Central Govt. Securities should be valued on the basis of the prices/ YTM rates put out by the PDAI/ FIMMDA at periodical intervals. The 6.00 per cent Capital Indexed Bonds may be valued at “cost” and Treasury Bills should be valued at carrying cost.
State Government securities as well as the other approved securities will be valued applying the YTM method by marking it up by 25 basis points above the yields of the Central Government Securities of equivalent maturity put out by PDAI/ FIMMDA periodically.
Valuation of Unquoted Non-SLR Securities:
DEBENTURES/BONDS:
All debentures/ bonds other than debentures/ bonds which are in the nature of advance should be valued on the YTM basis. Such debentures/ bonds may be of different companies having different ratings. These will be valued with appropriate mark-up over the YTM rates for Central Government securities as put out by PDAI/ FIMMDA periodically. The mark-up will be graded according to the ratings assigned to the debentures/ bonds by the rating agencies subject to the following:
• The rate used for the YTM for rated debentures/ bonds should be at least 50 basis points above the rate applicable to a Government of India loan of equivalent maturity.
• The rate used for the YTM for unrated debentures/ bonds should not be less than the rate applicable to rated debentures/ bonds of equivalent maturity. The mark-up for the unrated