
RBI's rate cut bonanza, ₹26,000 crore G-Sec buyback likely to lower bond yields
Bond yields in India are expected to go down following the recent frontloaded rate cut by the Reserve Bank of India (RBI), says economists ANI spoke with.
The economists noted that a rate cut is likely to influence the market to adjust to a revised and more accommodative interest rate outlook, pushing dated government securities (G-sec) yields down further.
Debopam Chaudhuri, Chief Economist at Piramal Group told ANI "The frontloaded rate cut is likely to drive a further easing in dated G-sec yields as markets adjust to a revised interest rate trajectory. The RBI's shift to a neutral stance could be initially interpreted as a signal of a pause in the rate-cut cycle".
He further stated that "these are likely to be short-term adjustments, and bond yields are expected to resume their downward trend once market volatility subsides".
However, in the near term, some upward pressure on yields may emerge as investors may look to book profits after the rally in bond prices. Moreover, the RBI's shift to a neutral policy stance may be initially read by markets as a pause in the rate-cut cycle, which could also cause some temporary volatility in yields.
Additionally, the US Federal Reserve is also anticipated to lower its terminal interest rate to around 4 per cent, creating more room for the RBI to continue with its rate-cutting approach.
Dipanwita Mazumdar, Economist specialist at Bank of Baroda told ANI "India's long end yields especially the 10Y part of the curve has priced in the rate cut. Thus we expect it to be largely capped as the change in stance has hinted lesser scope for future monetary policy easing. Hence we do not expect much momentum. However, the short run part of the curve will be more susceptible to the liquidity support given by RBI especially through CRR cut. Thus we expect some prevalence of a steeper yield curve for India in the near term".
In a parallel move aimed at managing its debt portfolio and supporting the bond market, the Government of India has announced a buyback of dated securities worth ₹ 26,000 crore (face value).
The buyback will be conducted through an auction on June 12, 2025. It will include five securities maturing in 2026: 5.63 per cent GS 2026 (maturing on April 12), 8.33 per cent GS 2026 (July 9), 6.97 per cent GS 2026 (September 6), 5.74 per cent GS 2026 (November 15), and 8.15 per cent GS 2026 (November 24).
There is no notified amount for individual securities within the ₹ 26,000 crore ceiling. The auction will be held on RBI's E-Kuber system between 10:30 a.m. and 11:30 a.m., and the results will be declared the same day. Settlement will take place on June 13, 2025.
With the rate cut and the government's buyback initiative, economists believe bond yields will continue their downward trend in the medium term, providing further support to market liquidity and helping lower borrowing costs for the government.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Time of India
21 minutes ago
- Time of India
Financial sector regulators to work on universal KYC
Financial sector regulators, led by the RBI, are developing a universal KYC framework with the CKYCR to streamline verification processes. Nirmala Sitharaman urged regulators to ensure seamless KYC experiences for citizens and expedite refunds of unclaimed amounts through district-level camps. The FSDC also discussed strengthening cybersecurity and implementing budget announcements related to KYC simplification for NRIs, PIOs, and OCIs. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: Financial sector regulators, including the Reserve Bank of India , will look at a universal know your customer (KYC) framework and develop systems with the Central Know Your Customer Registry (CKYCR) to promote the inter-usability of records and avoid multiple minister Nirmala Sitharaman in a meeting of the Financial Stability and Development Council (FSDC) in Mumbai on Tuesday urged the financial sector regulators to take proactive steps to ensure that citizens have a seamless experience with the KYC processes across the financial a statement, the finance ministry said the FSDC also considered strengthening the cyber resilience framework of the Indian financial sector through a financial sector-specific cybersecurity FSDC also discussed issues relating to formulating a strategy for implementing the past decisions and the budget announcements, which included prescribing common KYC norms, simplification and digitalisation of the KYC process, including digital onboarding for non-resident Indians (NRIs), PIOs and OCIs in the Indian securities FSDC has representation from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (Irdai), the Securities and Exchange Board of India (Sebi), the Pension Fund Regulatory and Development Authority (PFRDA) and officials from the finance and corporate affairs urged the regulators and departments to expedite the process of refund to rightful owners of unclaimed amounts by holding special district-level also emphasised that interest of common citizens be kept in mind and therefore expeditiously refund the claims of the rightful claimants, the statement unclaimed amounts comprise deposits in banks, unclaimed shares and dividends managed by IEPFA and unclaimed insurance and pension funds with Irdai and PFRDA, drive is to be conducted in coordination with RBI, Sebi, MCA, PFRDA and Irdai along with banks, pension agencies and insurance finance ministry statement noted that the FSDC also deliberated on the emerging trends from the domestic and global macro-financial situation and stressed the need to be vigilant."The council recognised the need for proactive efforts to mitigate potential risks to financial stability while adopting adequate safeguards for the financial system's resilience," it said.


The Hindu
33 minutes ago
- The Hindu
From The Hindu, June 12, 1975: Proposals to attract remittances from Indians abroad
New Delhi, June 11: The Union Finance Ministry is examining the feasibility of making it obligatory for Indians taking jobs abroad to remit to the country a certain proportion (about 10 per cent) of their earnings every year. The remittances may be made either to their relatives in the country or credited to a bank account maintained in India. This is among the three proposals which the Reserve Bank of India has been asked to examine in detail and comment upon. The other proposals are: (i) The feasibility of permitting non-resident Indians living abroad to maintain bank accounts in India in the unit of a convertible foreign currency, either the pound sterling or the dollar and (ii) permitting them to invest in company shares in India. The Reserve Bank is already stated to have commented on these proposals in detail. The contents of its note to the Finance Ministry are not known, but they seem to be by and large favourable. The Finance Ministry was prompted to consider the question of permitting non-resident Indians living abroad to keep their remittances to India in the unit of account of a foreign currency to protect their savings from any erosion on account of the fall in the rupee value. Under the existing banking laws, this is not permissible.


Time of India
37 minutes ago
- Time of India
RBI moots apps for feature phones to deepen financial inclusion
Mumbai: The Reserve Bank of India has urged banks and finance companies to launch low-bandwidth apps and flexible products that can reach remote parts of India and underserved populations, as part of its drive towards 100% financial inclusion, said people privy to the development. The RBI has also asked banks and finance companies to ensure that the new apps and digital products have features to prevent cyber fraud. The central bank is urging banks to design digital products that meet the needs of customers using feature phones with low bandwidth since connectivity is a major roadblock in remote parts of the country. All retail banking products are currently available through mobile applications on smartphones. However, not all services are made available on feature phones. The RBI is aiming to bridge this gap. Separately, the RBI said it is planning to review regulations on internet and mobile banking for all banks. Upon taking charge as the RBI governor, Sanjay Malhotra, had started financial inclusion, which implies making financial services available to all citizens, especially the underserved population. The Reserve Bank's Financial Inclusion Index (FI-Index), which measures the extent of financial inclusion in the country, improved from 60.1 in March 2023 to 64.2 in March 2024, according to latest data published by the central bank. The index covers access, usage and quality of financial services. The RBI plans to review the index in FY26. Live Events The RBI is planning to conduct a survey on the usage of digital payments, it said in its latest annual report. The survey will be done to "understand transaction behaviour and challenges faced by users, thereby facilitating evidence-based decision making towards enhancing financial inclusion and making payment systems more effective". The RBI is also encouraging banks to design products that meet customer needs such as flexible repayments, variable savings and seasonally adapted services-enhancing access, usage, and service quality, RBI deputy governor M Rajeshwar Rao said early this month.