Preserve financial stability

Higher inflation tolerance will increase risks

Lower interest rates and higher liquidity have resulted in record issuance of corporate bonds, with Indian companies raising over Rs 8 trillion from the bond market so far in the current year. Higher liquidity has reduced the spread over government securities and lowered the market interest rates. As Reserve Bank of India (RBI) Governor Shaktikanta Das noted in his statement on monetary policy last week, the spread of AAA-rated three-year bond yields over government bonds has come down from 60 basis points on October 8 to 17 basis points. Yields on lower-rated bonds have also dropped significantly. However, lower interest