A favourable demand-supply balance of G-secs by increasing demand through reducing their supply and also lowering downward rigidity on operative overnight rates, RBI can ensure better transmission and help government save Rs 10,000 crore annually on interest cost, says a report.
When the central government goes around with a hat in hand, it is usually questionable whether it can negotiate, much less, secure cheaper loans.
Yields have fallen 13 basis points over the past two days as shortsellers scramble for cover.
Banks' heavy investments into G- secs since the note-ban may turn out to be a bad call as they await a treasury shock in the current quarter following the 45 -50 bps spike in bond yields.
Speaking to CNBC-TV18 Anshula Kant, Deputy MD & CFO of SBI said that deposit growth has been strong for the bank. Sudhin Choksey, MD of Gruh Finance, said that demand side incentives are a significant relief to families in the segment. Jairam Sridharan, CFO, Axis Bank said the government schemes are good.
Insurance companies have chosen to invest heavily in government securities, even as IRDAI has permitted investments in new instruments
The 7.59 percent government security maturing in 2026 gained to Rs 109.1350 from Rs 108.2850 previously, while its yield moved down to 6.26 percent from 6.38 percent.
Government bonds (G-Secs) rebounded due to fresh demand from corporates and banks, while the overnight call money rates ended lower following lack of demand from borrowing banks amid comfortable liquidity situation in the banking system.
The Finance Ministry hopes that foreign portfolio investors' (FPIs) exposure to the domestic bond markets will rise from the present 65 per cent of their permissible ceiling of USD 51 billion.
The 7.59 percent government security maturing in 2026 declined to Rs 99.55 from Rs 99.63 previously, while its yield moved up to 7.65 percent from 7.64 percent.
"The Reserve Bank, in consultation with the Government of India, has converted two securities from its portfolio maturing in 2016-17 and one security maturing in 2021-22 having total face value of about Rs 37,300 crore to longer tenor securities maturing in 2023-24 and 2024-25," RBI said in a notification.
Government bonds (G-Secs) dropped on heavy selling pressure from banks and corporates, while the overnight call money rate maintained higher due to firm demand from borrowing banks amid tight liquidity in the banking system.
RBI said the existing requirement of investments being made in G-sec, including state development loans with a minimum residual maturity of three years will continue.
The data on Wholesale Price Index (negative 4.9 percent) and Consumer Price Index (3.66 percent) continue to reflect a benign inflationary environment, said ratings and research firm Ind-Ra
Amandeep Chopra of UTI AMC believes the US Federal Reserve's decision on when to raise rates continues to be the biggest trigger in the immediate term.
Fitch is withdrawing the ratings in view of recent changes effected by the Securities and Exchange Board of India (Sebi), the global credit rating agency said in a statement.
Ashutoh Khajuria, president-treasury, Federal Bank and Vaibhav Agarwal, vice president- banking research, Angel Broking in an interview to CNBC-TV18 shared their opinion and outlook on the 10-year yield, the Bank Nifty and banking stocks.
The removal of restriction in FII investment in government securities (G-secs) will make India eligible for inclusion in the JP Morgan's Government bonds-emerging markets index, a popular index among emerging market investors, StanChart said in a report.
In an interview to CNBC-TV18, SS Mundra, Chairman, Bank of Baroda and Arun Kaul, Chairman, UCO Bank spoke about impact of RBI relief on MTM losses.
Spooked by the flight of overseas investments in Indian securities, the government started doling out bounties on primary bond dealers (PDs) whose commissions have zoomed manifold. This is aimed at building confidence while protecting them from any possible loss if yields rise after the bond auctions, sources told moneycontrol.com.
Market regulator Sebi will conduct on Thursday an auction for grant of investment limits to foreign investors in government debt securities worth over Rs 42,000 crore â€” the biggest sale of G-Secs (government securities) so far this year.
SBI aims to net Rs 1,500 crore profit from domestic treasury operations this fiscal and is set to post "substantial improvement" in gains during the first quarter, a top official has said.
Given India‘s (relatively) closed debt markets and caps on FII limits (USD 30 billion for government and USD 51 billion for corporate bonds), less than 5% of bonds in India are foreign owned, much lower than other emerging markets. This limits the impact of FII selling on yields.
Sources say the proposal is at an conceptual stage; the pros and cons are being examied. The annual hike will remain within 5 percent of the annual borrowing.
Government securities (G-Sec) remained up due to consistent demand from banks and corporates, while the call money rates also finished higher at the overnight-day call money market here today owing to good demand from borrowing banks.