Why the buoyancy in g-Sec markets augurs well for public sector banks

With lower g-sec bond yields, banks may see Rs 10,500 crore MtM profits


Even as the markets are worried about the inability of banks to fully transmit the recent rate cuts by the Reserve Bank of India (RBI), there is a bonanza in the offing for public sector banks (PSBs). The decline in government bond (G-Sec) yields is likely to boost earnings of PSBs in the June quarter (Q1). Rate cuts in the past three consecutive monetary policy meetings and an accommodative stance by the RBI in the recent policy announced on June 6 have cheered the G-Sec market.  Yields on the 10-year G-Sec have dropped 35 basis points (bps) since the end of March to 7 per cent ...