Indian bonds rally after RBI allows banks to spread debt losses

Government banks were staring at a potential mark-to-market loss of 200 billion rupees ($3 billion) in the March quarter

India’s sovereign bonds rallied after the central bank allowed lenders to spread out trading losses, a second policy decision in two weeks to revive a debt market that had sold off for seven months.

The Reserve Bank of India said late Monday banks can account for their bond-trading losses, incurred in the past six months, over as long as four quarters. The move will help bring state-run lenders -- the biggest holders of debt -- back to the market, said Dhawal Dalal, chief investment officer for debt at Edelweiss Asset Management Ltd.

Government banks were staring at a potential mark-to-market loss of