Under bond market pressure, PSBs stare at Rs 75-90 bn MTM loss this quarter

Already weighed down by a pile-up of bad loans, bond market pressure is making the situation worse for public sector banks (PSBs). These institutions are the biggest investors in government bonds (G-secs).

Under Reserve Bank of India (RBI) guidelines, banks need to allocate a portion of their operating profit to offset any mark-to-market losses (notional losses from revaluing of assets at current prices) due to erosion of bond value under the Available for Sale (AFS) category. 

Some PSBs lowered their AFS portion in the June quarter but still