The RBI rejected banks’ proposal to stagger provisions for mark-to-market (MTM) losses in the March quarter. Banks argued that rising bond yields and a late $100 million cap on net open positions sharply hit treasury earnings, and they needed phased relief to manage the impact.
India’s bond markets are under pressure after the 10-year yield unexpectedly surged above 7 percent, triggering mark to market losses for banks. The move is spilling into rupee dynamics and heightening trader caution around prolonged conflict and sticky inflation. With government security auctions ahead, markets are pricing in more yield pressure as banks prepare for upcoming supply next fiscal year.
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