Investment Categories explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A grid rather than a list — every class of investment is presented across every measurement basis on which the NBFC holds it.
The nine investment categories
- Investments in Mutual funds
- Investments in Government securities
- Investments in Other approved securities
- Investments in Debt Securities
- Investments in Equity Instruments
- Investments in Subsidiaries
- Investments in Associates
- Investments in Joint Ventures
- Others (Specify)
The four measurement bases
Investments should further be classified as:
- Measured at amortised cost;
- Fair value through Other Comprehensive Income;
- Fair value through Profit or Loss;
- Designated at fair value through Profit or Loss.
The impairment loss allowance as per Ind AS 109 should be disclosed as a separate line item under the sub-heads (measurement categories) mentioned above. And additional disclosure of Investments within and outside India is required to be provided.
The four measurement categories are the Ind AS 109 ones — but not every investment an NBFC holds is measured under Ind AS 109.
Where the NBFC has used a basis other than amortised cost or fair value, the same may be included in column "Others", with the basis of measurement to be disclosed as a footnote. The example given is the important one: investment in subsidiaries measured at cost under Ind AS 27 shall be classified under "Others" in the Separate Financial Statements of the NBFC.
This is not an anomaly to be tidied away. Ind AS 27 permits an entity to carry investments in subsidiaries, associates and joint ventures at cost in its separate financial statements, and cost is neither amortised cost nor fair value. Without the fifth column, such investments would have to be forced into a measurement category that does not describe them.
The footnote requirement is what keeps the column honest — "Others" without a stated basis of measurement would tell a reader nothing at all about how the amount was arrived at.
The impairment position across investment categories
As per Division III to Schedule III, the aggregate amount of impairment in value of investments should be disclosed separately. Under Ind AS 109, the company is required to recognize a loss allowance for expected credit losses on investments measured at amortized cost, and such loss allowance should be presented as an adjustment to the amortized cost of the investment.
But equity instruments measured at other than at cost, and debt instruments measured at fair value through profit or loss, do not require a separate evaluation of impairment amount. Hence in such cases the disclosure pertaining to impairment shall not be applicable.
Reading the investment categories together
The nine classes describe what the NBFC has invested in; the measurement bases describe how those holdings are valued and where their movements go. The two together answer questions neither could answer alone — for instance, whether a large government securities holding is producing OCI volatility or is locked at amortised cost, and whether an equity portfolio's gains are running through earnings or through reserves.
The within and outside India split adds the third dimension, which for a financial business carries currency and jurisdictional risk that the measurement basis does not capture.
Common mistakes
- Presenting investments by class without the measurement split.
- Forcing cost-based subsidiary investments into amortised cost.
- Using the "Others" column without a footnote stating the basis of measurement.
- Computing an impairment allowance for FVTPL debt or fair-valued equity instruments.