RBI allows banks to spread bond trading losses

The Reserve Bank of India has allowed banks to spread their bond trading losses incurred in December 2017 and March 2018 quarters equally over up to four quarters. The move will come as a major reprieve to India`s state-run banks, which have been hard hit by trading losses from a spike in bond yields over recent months. 

India`s state-run banks, which are already struggling under the burden of provisioning for record levels of bad loans, have been further hit by mark-to-market losses on their huge bond holdings due to a sustained spike in bond yields since July.

Last month, Credit Suisse warned that Indian state-run banks could lose more than 200 billion rupees ($3.1 billion) in the January-March quarter, due to a continued spike in bond yields and as they held more bonds than are required by the regulator.