On July 22, Kotak Mahindra Bank announced that its investments in government securities increased 53.3 percent year over year in the first quarter of the current fiscal year, compared to a decline of 27.2 percent in the same period last year.
According to dealers, the Reserve Bank of India (RBI)’s rate halt since April and the subsequent decrease in yields may have led the Mumbai-based private lender to boost its exposure to government assets. Bond yields and prices follow different trajectories.
The monetary policy committee (MPC) of the RBI has maintained the repo rate at 6.5 percent during the two policy reviews of the current fiscal year as inflation declines. The following MPC meeting is scheduled for August 8–10.
In April–June, Kotak Mahindra Bank increased its holdings in government securities from Rs 61,349 crore to Rs 94,038 crore, according to an investor presentation.
It was Rs 89,853 crore in the preceding quartere total amount invested from April to June increased by over 39% year over year to Rs 1.24 lakh crore from Rs 89,183 crore.
The government bond yields, especially on the benchmark bond, decreased by about 19 basis points (bps) in the first quarter of the current fiscal year. One tenth of a percentage point is referred to as a basis point.
The 10-year benchmark 2033 bond, which was trading at 7.3056 percent on April 3, according to data gathered from Clearing Corporation of India Limited (CCIL), dropped to 7.1166 percent on June 30.
According to data from the RBI, bank investments in federal and state government securities increased by 15.2 percent year over year to Rs 57.83 lakh crore on June 16.
