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CS Professional · Banking and Insurance - Laws and Practice · Analysis of Financial Statements of Banks

Lakshmi Bank holds Government securities that it classifies as Held to Maturity and also holds CRR balance with RBI and cash in hand. When preparing the asset side of its balance sheet, where will the CRR balance with RBI be reported?

The CRR balance with RBI is reported under Cash and Balances with Reserve Bank of India, alongside cash in hand. Government securities held to maturity go to Investments, so CRR must not be mixed with them or shown under Advances or Other Assets.

  1. AUnder Investments, with Government securities
  2. BUnder Cash and Balances with Reserve Bank of IndiaCorrect
  3. CUnder Advances, as a secured loan to RBI
  4. DUnder Other Assets

Explanation

Cash in hand and balances with RBI (including the CRR balance) are shown together in the first asset schedule, Cash and Balances with RBI. Government securities, including HTM, go to Investments. CRR is not an advance or an other asset.

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