The high yield level is likely to make dent in profitability of banks as they have made provisions for erosion in prices of bonds in investment portfolio, banking analysts said.
Allahabad Bank CMD A C Mahajan said, the yields from bonds are going up. For example, for 100-year bonds the yield increased to 8.6 per cent from 7.9 per cent in March. "It may have some impact on our profitability," he said.
Government bond prices ended down but managed to crawl up from the day's low primarily due to lower-than-expected devolvement on primary dealers at today's auction of 8.24 per cent, 2027 paper, dealers said.
