RBI's bond loss relief for banks
The RBI has allowed banks to spread provisioning towards depreciation of bond portfolio over four quarters, commencing from the quarter in which the loss is first incurred. This relaxation comes in the backdrop of banks facing huge provisioning burden towards bad loans in the fourth quarter of
FY18. Bond yields have risen sharply over the past six months on concerns of excess government bond supply. Yields on the 10-year government security jumped from 6.51 per cent at the end of the first quarter of FY18 to 7.55 per cent at the end of fourth quarter of FY18.