HDFC Bank net gains Rs 482.87 crore after transition to revised norms on bank investment portfolio

HDFC BANK

Private sector lender HDFC Bank on July 20 said it net gained Rs 482.87 crore after transition to the revised norms for classification, valuation and operation of investment portfolio of banks on April 1.

The lender has credited the amount to the general reserves as specified in the norms.

“On transition to the framework on April 1, 2024, the bank has recognised a net gain of Rs 482.87 crore (net of tax of Rs 127.00 crore), which has been credited to general reserves, in accordance with the said norms,” bank said.

The lender also said that the impact of the revised framework for the period subsequent to the transition is not ascertained and as such the income/profit or loss from investments for the reporting quarter is not comparable with that of previous periods.

Last year, the Reserve Bank of India (RBI) had issued updated directions for banks regarding the classification, valuation, and operation of their investment portfolios.

The revised norms include principle-based classification of investment portfolio, tightening of regulations around transfers to/from held to maturity (HTM) category and sales out of HTM, inclusion of non-SLR securities in HTM subject to fulfilment of certain conditions and symmetric recognition of gains and losses.

As per norms, banks will have to classify their investments – except investments in their own subsidiaries, joint ventures and associates – into three categories from the next financial year: available for sale (AFS), held to maturity (HTM), and a new category called fair value through profit and loss, or FVTPL.

The existing held for trading (HFT) category will become a sub-category of the FVTPL, the central bank said in a press release.

HDFC Bank reported 35.3 percent rise in its profit after tax to Rs 16,174.75 crore in the first quarter of the current financial year. On a sequential basis, HDFC Bank's net profit fell 2.1 percent.