Banks flag concerns on rupee, floating rate bonds ahead of RBI policy

The discussions were held ahead of the RBI's next monetary policy statement, scheduled August 5

At interactions last week with senior officials from the Reserve Bank of India, select banks gave feedback on two key bond market concerns, namely, recent volatility in the rupee-dollar exchange rate and heavy losses incurred on floating rate government bonds due to a demand-supply mismatch, sources told Business Standard.

The discussions were held ahead of the RBI’s next monetary policy statement, scheduled on August 5.

Indian banks are large holders of government securities because of a regulatory mandate to set aside a certain percentage of deposits in sovereign bonds.

Over the past few years, banks have bought bonds over and