RBI Asks Banks to Revalue Bond Derivative Trades
· Business · Bloomberg, Economic Times
The Reserve Bank of India has instructed several lenders to adjust their accounting methods for bond forwards contracts. During recent in-person audits, the central bank mandated that these trades must now use Level 3 inputs for valuation purposes. These derivative assets represent billions of dollars in value across the domestic banking industry. The directive follows private discussions held between the regulator and affected financial institutions.
Why it matters
This change in valuation methodology could impact the balance sheets of Indian banks by altering how they report the value of their significant bond-forward holdings.
Read the original report — Bloomberg
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