Tax Lolly May Prompt Big Psbs To Sell Chunk Of Gilts

BoB and BoI are among those seeking to participate in the buyback of 24 government papers

Big public sector banks (PSBs) are keen to offload chunk of their illiquid high-coupon gilts in view of the tax benefits.

The Centre has allowed banks to use the proceeds from the selloff to clean their balance sheets.

Bank of Baroda (BoB), Bank of India (BoI), Central Bank of India are among the banks which are keen to sell a substantial part of their gilt holdings.

Weaker banks are, however, unlikely to sell their securities as the 24 papers that the government is planning to buy back are high yielding and parting with them will impact their profitability.

BoB is likely to offload around Rs 700-800 crore of its portfolio of around Rs 1200 crore invested in high-coupon securities.