RBI monetary policy: Finance Ministry says MTM losses for banks will rise

Banks will have to register more losses on their books in the first three quarters of the financial year due to the regulator's move to allow spreading of MTM losses over four quarters

Finance ministry officials feel that the Reserve Bank of India’s decision to change a valuation rule related to state government securities will increase the mark-to-market (MTM) losses incurred by public sector banks.

At present, state government securities are valued at a fixed mark-up of 25 basis points above the corresponding central government securities. The RBI has now said securities issued by each state government should be valued at market prices.

The finance ministry officials were also of the view that banks will have to register more losses on their books in the first three quarters of the financial year due to the