RBI Launches Operation Knicker-Twist

(The name credit is to @eyeofsiva who will probably disagree with my opinion on it!) RBI has decided to panic as the 10 year bond went to 9.24% . In an announcement today , it decided to take four steps. Three are benign: Banks were earlier told to bring down their “Held to Maturity” (HTM) holdings down to 23% of assets, from 25%. Such bonds are not impacted by mark-to-market changes – so if their prices fall, banks don’t have to book  a loss. With lesser HTM bonds, banks will have more bonds that they have to mark losses on …

(The name credit is to @eyeofsiva who will probably disagree with my opinion on it!) RBI has decided to panic as the 10 year bond went to 9.24% . In an announcement today , it decided to take four steps. Three are benign: Banks were earlier told to bring down their “Held to Maturity” (HTM) holdings down to 23% of assets, from 25%. Such bonds are not impacted by mark-to-market changes – so if their prices fall, banks don’t have to book  a loss. With lesser HTM bonds, banks will have more bonds that they have to mark losses on …

[via Capital Mind]

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