State-run banks may see recovery of MTM provisions for first half of FY19

MTM gain and availability of liquidity mitigates pressure to increase deposit rates, amid relatively slower growth in deposits

Apart from the central government’s direct support in the form of additional capital infusion to some public sector banks, a sharp correction in government bond (G-Sec) yields has also been of help.

 The Nifty PSU Bank index surged 14 per cent in the December quarter, against a 0.6 per cent fall in the general benchmark Nifty 50.

As of end-December, yield on the 10-year G-Sec stood at 7.37 per cent versus 8.02 per cent at the end of September. With the recent fall amid significant recovery in crude oil prices, softening food inflation and the Reserve Bank of India’s (RBI’s) bond purchase