Definition
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.
Banks classify their investment book into categories under RBI norms. Securities in the HTM bucket, mostly SLR government bonds the bank plans to hold to maturity, are not marked to market, so interim price swings do not hit the profit and loss account.
This shields a large part of a bank's bond portfolio from interest-rate volatility. The RBI periodically revises the HTM ceiling and rules for shifting securities between categories, since a high HTM share can hide unrealised losses when yields rise sharply.
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.
- 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.
- 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.
- 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.