RBI asks some banks reclassify bond forwards level 3 assets
Business
The Reserve Bank of India (RBI) has asked some banks to reclassify their bond forward contracts as Level three assets.
This means banks now have to use their own estimates instead of relying on market prices, which could affect how much money they set aside for safety and what they pay out in dividends.
FIMMDA talks, Clearing Corp testing platform
Since Level three assets are harder to value, banks are having discussions with FIMMDA and informal talks with the Clearing Corp. of India Ltd. to figure out better ways to price these deals.
The Clearing Corp. of India is also testing an electronic trading platform for bond forwards, hoping it will bring more transparency and make things smoother for everyone involved.