Full formBanking & Finance
HTMstands forHeld-to-Maturity
Full Form of HTM
What is HTM?
Held-to-Maturity (HTM) is a classification for debt securities under Indian accounting standards. When an entity such as a bank or a corporate purchases bonds or debentures with the intent and ability to hold them until their maturity date, these are categorized as HTM investments. The key feature of HTM securities is that they are carried at amortized cost on the balance sheet rather than at market value. This means their valuation does not fluctuate with market interest rates, providing stability in earnings. In India, the Reserve Bank of India (RBI) prescribes guidelines for banks regarding classification, valuation, and limits for HTM securities. For instance, banks cannot sell HTM securities before maturity except in specific circumstances like a severe liquidity crunch. This classification is crucial for risk management and reporting. For students preparing for banking exams like RBI Grade B, SEBI, or professional courses such as CA and CFA, understanding HTM is essential. It helps in analyzing a company's investment strategy and financial health. The concept also appears in the context of Basel III norms where HTM securities contribute to the liquidity coverage ratio. Overall, HTM is a foundational term in Indian banking and finance.
HTM का फुल फॉर्म
परिपक्वता तक धारित प्रतिभूति
Example
The bank's decision to classify the newly issued government bonds as HTM reduced the impact of rising interest rates on its profit and loss statement.
HTM — frequently asked questions
What is the full form of HTM?
The full form of HTM is Held-to-Maturity. It refers to debt securities that a company intends to hold until maturity.
What is the difference between HTM and AFS?
HTM securities are held to maturity and valued at amortized cost, while AFS (Available-for-Sale) securities are marked to market, causing fluctuations in other comprehensive income.
Are HTM securities allowed to be sold before maturity?
Only under specific conditions such as a significant deterioration in the issuer's creditworthiness or a regulatory change; otherwise, early sale can taint the entire HTM portfolio.