PM Modi's cash build-up adds to litany of India's bond market woes

First it was the rising oil price that spooked investors in India’s bond market. Then demand for sovereign debt from state-owned banks dried. Now another pillar of support -- liquidity -- is giving way.

A seasonal crunch in the banking system is becoming acute because of a buildup in the cash the government parks at the central bank. A lumpiness in revenue -- a bulk of it flows into state coffers toward March -- and a drop in spending has swollen these balances to between 500 billion rupees ($7.7 billion) to 1 trillion rupees, according to Edelweiss Securities Ltd.

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