Investment Policy

In compliance of the instructions issued by the Reserve Bank of India, the revised Investment Policy of the Bank will be as under:-

1. Mandatory Investment

In terms of mandatory requirement of Banking Regulation Act, it is compulsory to invest minimum 3% as Cash Reserve Fund (CRR) & 25% as Statutory Liquid Reserve (SLR- investment in Govt. & other Notified Securities) of the total Demand & Time Liability of the Bank, which will be subject to change time to time. Hence, Bank will ensure compliance of the directives of the Banking Regulation Act and the effective instructions of the Reserve Bank of India in this regard.

This investment is of low income, hence investment up to 5% in cash reserve and up to 30% in liquid asset will be treated normal. Up to 31.03.2011, SLR will be 15% and from 01.04.2011, it will be necessary to maintain upto 25%

2. Loans & Advances

Bank can invest upto 75% of own funds and upto 70% of total deposits in loans & advances, out of which, after observing the prescribed norms for priority sector & weaker section of the society, remaining portion can be advanced as per Loan Policy of the Bank keeping in view the ceiling of maximum amount of advance to a single person, similar type of business & on similar type of securities to minimize the risk involved.

3. Investment with other Citizen Cooperative Banks

Bank will not make any investment with these Banks except undertaking normal transactions in the accounts opened for clearing and transfer of funds purpose.

4. Investment in other Banks

Bank may invest its surplus funds in any commercial, private & cooperative Banks but if any such bank provides considerably higher rate of interest then its financial position has to be analyzed. Investment of the liquid surplus funds from time to time has to be made in such a way that there should not be any difficulty in meeting out the funds requirement for daily clearing adjustment as well as payment of the deposits on due dates of maturity.

5. Investment in non- SLR Debt Securities

In compliance of the instructions issued by the Reserve Bank of India from time to time and also keeping in view the additional income on investment and safety of surplus funds, investment may be made in Liquid Funds enjoying good market credit rating and also trading in Government Securities. In this connection Board of Directors keeping in view the circumstances prevailing at that time may fix a limit for the purpose, take a decision in the matter of investment and delegate powers to the Managing Director for investment to a certain extent at one time. Investment will be made with the institutions which are enjoying AAA credit rating. Such investment will not exceed 10% of the total deposits of the Bank.

6. Investment in other Institutions, Corporations & Companies

Bank will not invest its surplus funds in any other institution, company , corporation etc whatsoever be the attractive rate of interest.

7. Investment in share money of Cooperative institutions

Bank may invest 2% of its personal funds in the share money of the Cooperative Institutions but it will be in accordance of the directives of the Reserve Bank of India.

8. Investment in private companies or in Shares/ Debentures of other institutions other then Cooperative Institutions

Bank will not make any investment in private companies or in Shares / Debentures of other institutions other then Cooperative Institutions.

9. Investment in Deposit Certificates

Investment in Deposit Certificates issued by the scheduled commercial banks or financial institutions will only be made by the Bank in compliance of the directives of the Reserve Bank of India in this regard.

10 Investment in Non-Banking Financial Companies

Bank will not make investment in any Non-Banking Financial Company.

11. Investment in Government & other Notified Securities

"Government Securities" will mean securities issued by the Central & State Governments and definitions of some relevant features of the same will be as under:-

  • (i) "Notified Securities" will mean as per Section 5(9)(i) and (ii) of the Banking Regulation Act.
  • (ii) "Banking Regulation Act" will mean it's modification also. Mandatory investment will be made in compliance of the same.
  • (iii) In present circumstances trading in securities will be done as per the prescribed policy of the Board of Directors after getting expertise in technical field and also having arrangement of sufficient trained staff in the Bank.
  • (iv) Entire transactions relating to securities will be conducted through CSGL Account with the HDFC Bank without taking services of any mediator.
  • (v) In normal circumstances, the BOD will frame a policy separately in terms of the directives of the Reserve Bank of India before starting trading in securities.

12. Cash Management

  • (i) Except in abnormal conditions, cash balance in the Bank will be kept within the fixed limit as excess cash will effect the profitability of the Bank.

13. Besides above, day to day asset liability management should be prepared in such a way that after complying the mandatory requirements, Bank should earn maximum profit.

14. To act upon the aforesaid Investment Policy in a regular way Manager (Operations) of the Bank will be collectively authorized with the other authorized officers/ employees. No officer / employee will be authorized independently.

15 Chief Executive of the Bank will be apprised with the entire investment position on weekly basis. Apart from regular conduct of business, investment of Rs. 20.00 lac & over will be made with prior approval of the Managing Director / Chief Executive of the Bank.

16. Board of Director will be appraised with the entire position of the investment on quarterly basis.

17. No amendments/ modification in the provisions of the sanctioned Investment policy will be made without the Board of Directors.

18. In the process of investment, in no circumstances provisions of the Reserve Bank of India will be violated.