Definition
Available for Sale (AFS)
Available for Sale is the bank investment category for securities not held to maturity or for active trading, which are marked to market with changes routed through reserves.
Securities a bank may sell before maturity but does not actively trade fall in the AFS bucket. Under the RBI's revised investment framework aligned closer to global standards, AFS valuation changes flow to a reserve in equity rather than directly to profit.
The AFS portfolio exposes a bank to interest-rate moves: rising yields create unrealised losses that dent the AFS reserve and, indirectly, capital. The split between HTM, AFS and HFT therefore shapes how much a bank's earnings and capital react to bond-market swings.
Related terms
- Mark to MarketMark to market (MTM) is the daily settlement of profit or loss on a futures position based on that day's closing price.
- Held to Maturity (HTM)Held to Maturity is the bank investment category for securities intended to be held until they mature, valued at cost rather than market price.
- Treasury Income (Banking)Treasury income is the profit a bank earns from managing its investment portfolio, mainly gains and losses on government and corporate bonds and forex.
- Held for Trading (HFT)Held for Trading is the bank investment category for securities bought to profit from short-term price movements, marked to market through the profit and loss account.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.