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Indian Banks avoid Rs 30,000 cr MTM losses on RBI measures: Icra

By Religare
|

Indian banks were set to lose up to Rs 30,000 crore on mark to market (MTM) but were rescued by the Reserve Bank's relaxations yesterday, said rating agency Icra, reported PTI.

In a statement, Icra said that the losses will now get reduced to Rs 3,000-5,500 crore.

Indian Banks avoid Rs 30,000 cr MTM losses on RBI measures
"Indian banks were staring at a Rs 25,000-30,000 crore Mark-to-Market (MTM) losses on their fixed income investment portfolio in Q2, FY14 as 10-year G-sec yields hardened from 7.45 per cent as on June 30, 2013, to 9.2 per cent by August 19," it said.
 

According to the Icra estimates, the losses for entire year on account of MTM have been Rs 9,000-17,000 crore for the system.

Icra said as a consequence of the RBI measures, there will be a "significant reduction" in the provisioning by banks' for the MTM losses.

The rating agency said as the bank have been given an option to convert, the AFS or HFT book will reduce to 5-6 per cent on the portfolio as a result of the shift in investments to MTM.

They will also choose to move the longer duration securities to the MTM as the yields on those were higher only by 0.15 per cent as on July 15 as against June 30, it said.

Dion Global Solutions Ltd.

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