MUMBAI (Reuters) - India’s state-owned banks will slow government bond purchases in the weeks ahead as banking system liquidity tightens, treasury officials from nine state lenders said.
REUTERS/Hemanshi KamaniBond yields have spiked since Oct. 6, when the central bank said it will keep monetary policy restrictive and sell bonds to manage banking system liquidity.
These lenders have bought 253 billion rupees ($3 billion) of government debt since Sept. 22, including 100 billion rupees on Oct. 6.
Banking system liquidity - the quantum of funds in the interbank market - has largely been in deficit from the middle of September.
Bond traders expect the banking system’s cash position to stay in deficit because of tax payments and likely bond sales by the Reserve Bank of India (RBI).
Persons:
“, ” Vijay Sharma, PNB Gilts, Bond
Organizations:
REUTERS, Banking, Reserve Bank of India, “
Locations:
MUMBAI, ”, India