Banks to book treasury gains in Q1FY26 on yield fall, OMO support

Bond yield drop and ₹2.5 trillion RBI OMOs to lift treasury income in Q1FY26 but weak credit growth may weigh on net profits, especially for PSU banks

Banks are expected to post healthy treasury gains for the first quarter of the current financial year, said market participants. According to them, this would be aided by a decline in government bond yields and strong participation in the Reserve Bank of India's (RBI’s) open market operations (OMO).

 

The benchmark 10-year government bond yield fell by about 20 basis points (bps) during the quarter, from around 6.58 per cent to 6.38 per cent. The sharpest drop in yields occurred ahead of the RBI's policy actions in June. At one point, the yield had even touched 6.24 per cent, indicating substantial