At least four large banks in the State have increased their internal limits for investing in government bonds after discussions with the reserve Bank of India last month, according to five treasury officials who are aware of the decisions.
Bank of Baroda, Punjab National Bank, Canara Bank and Union Bank of India-one of the top five of the government lenders by Assiva-Hebben increased their investment caps by 5 to 20 percentage points, according to the sources.
“Most of the top five-zes banks that cure one have raised the internal limit they had established to take exposure to national debt in Treasury books after a round of consultation and meetings with the Central Bank,” said one of the officials.
The sources asked for anonymity because they are not authorized to speak with media. The banks did not respond to e -mail questions.
Both private and public sector banks are important buyers of bonds issued by the government, which, according to the regulatory data, jointly hold nearly 36 percent of the debts of states.
Borrow cost lighting
States are expected to increase a record of £ 12 Lakh Crore by bonds in the current financial year, with £ 7 Lakh Crore expected between October and March.
Reduced purchases by banks, insurers and pension funds had driven the proceeds on government bonds higher by 40 to 70 basic points during the three months ending September, with various auctions underwritten.
Market participants now expect improved bank participation at auctions, which could relieve the proceeds. Banks had also sought changes in the auction process to reduce Mark-to-Market on their portfolios.
Published on October 3, 2025
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