Banks nearing limit to buy bonds; RBI meeting bankers ahead of H2 calendar

Banks are nearing their internal limits on state bond purchases amid rising supply and widening spreads, prompting RBI consultations ahead of the H2 borrowing calendar

Many commercial banks are nearing their internal limits for buying state government bonds amid higher supply of such securities — a message likely to be conveyed to the Reserve Bank of India (RBI) during interactions with bankers ahead of the bond issuance calendar for the second half of the financial year. The RBI is separately meeting public sector banks, private banks and primary dealers this week to discuss the H2 calendar.

 

The internal limit could be linked to the held-to-maturity portfolio, the government securities book, or the overall investment portfolio. Some banks also set specific limits for individual states.

 

According