PNB, 3 other PSU banks increase the investment limits of the government bonds: Sources

At least four large Indian 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 – under the top five of India’s government bolders – have 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.

Indian banks, including both private and entities in the public sector, are important buyers of bonds issued by the State, which, according to the regulatory data, jointly keep nearly 36% of the debts of states.

Borrow cost lighting
The Indian states are expected to increase a record of 12 trillion rupees ($ 135.2 billion) by bonds in the current financial year, with 7 trillion rupees 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.

($ 1 = 88,7600 Indian rupees)