Banks may incur Rs 13,000 cr MTM losses in Q1 on rising bond yields: Icra

State-owned lenders, which hold large quantities if G-Secs, to face brunt of yield spike

Rising bond yields may cause Indian banks to incur mark-to-market (MTM) losses of Rs 10,000-13,000 crore in their bond portfolios in the quarter ended June 2022 (Q1FY23), according to Icra.

The adverse impact of hardening of yields is expected to be felt most by public sector banks, given their higher holding of Government securities (G-Secs) of longer tenure. MTM losses on bond portfolios for them could be Rs 8,000-10,000 crore. For private banks such losses could be Rs 2,400-3,000 crore in Q1 FY2023.

The yield on 10-year government of India benchmark bonds rose sharply to 7.43 per cent on June