April 2, 2014 / 12:21 PM / in 4 years

CORRECTED (OFFICIAL)-India cbank says banks do not need to cut HTM holdings for now

MUMBAI, April 2 (Reuters) - The Reserve Bank of India clarified earlier remarks by Deputy Governor H R Khan to note that only the time limit for spreading bond losses held under banks’ mark-to-market portfolios had lapsed on March 31, and not the waiver on bringing down the ratio of debt under the held-to-maturity segment.

“In response to some media reports, Reserve Bank has clarified that as indicated in its circular dated August 23, 2013, the option for spreading the Mark to Market losses over the three quarters has ended on March 31, 2014, and no further extension has been allowed,” the RBI said in a filing on Wednesday.

Earlier in the day, Khan had created confusion in markets after he was asked by an analyst during a teleconference about a temporary waiver from a rule that banks bring down the ratio of debt under the held-to-maturity (HTM) category to 23 percent.

He had responded by saying the waiver had lapsed, and traders had believed the remark meant that banks would need to cut down their ratio of debt under the HTM category to 23 percent.

He later told Reuters his answer had been about another rule mandating banks spread bond losses under their mark-to-market portfolio by March 31.

Separately, RBI Governor Raghuram Rajan said the central bank was not averse to picking up dollars from currency markets on occasions of volatility. The central bank has been spotted by traders buying dollars recently to build up foreign exchange reserves. (Reporting by Suvashree Dey Choudhury and Archana Narayanan; Writing by Neha Dasgupta; Editing by Rafael Nam)

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