Latest news with #G-sec
&w=3840&q=100)
Business Standard
4 days ago
- Business
- Business Standard
Comfortable liquidity reinforced transmission, says RBI governor Malhotra
Comfortable liquidity maintained by the Reserve Bank of India (RBI) through its interventions has reinforced the transmission of the policy rate cut by the central bank's monetary policy committee (MPC) to the money, bond, and credit markets during the current easing cycle, RBI Governor Sanjay Malhotra said on Wednesday. He also assured that the RBI will maintain sufficient liquidity in the system to ensure continued smooth transmission to money and credit markets. System liquidity, as measured by the net position under the liquidity adjustment facility, has been in surplus, averaging ₹3 trillion per day since the last MPC meeting, compared to an average daily surplus of ₹1.6 trillion during the previous two months. 'Going ahead, as the cash reserve ratio cut announced in the last policy comes into effect in a staggered manner beginning September, it will further support liquidity conditions,' Malhotra said. Following the 100 basis point (bps) cut by the RBI's MPC since February, the weighted average lending rate of banks has declined by 71 bps for fresh rupee loans and by 39 bps for outstanding rupee loans between February and June. On the deposit side, the weighted average domestic term deposit rate on fresh deposits moderated by 87 bps during the same period. 'Going ahead, the RBI will continue to be nimble and flexible in its liquidity management. We will endeavour to maintain sufficient liquidity in the banking system so that the productive requirements of the economy are met and transmission to money and credit markets remains smooth,' Malhotra said. In the money market, in response to the cumulative policy repo rate cut of 100 bps in the current easing cycle, the weighted average call rate moderated by 108 bps. Since February, the three-month T-bill rate has declined by 110 bps; the three-month commercial paper rate for non-banking financial companies by 161 bps; and the three-month certificate of deposit rate by 170 bps. 'As transmission to money markets has been faster, large corporates have increasingly relied on market-based instruments such as commercial paper and corporate bonds to source funds, reducing their dependence on bank credit. Also, as the profitability of large corporates has increased, internal resources have become an important source for business expansion,' Malhotra said. While the five-year and 10-year G-sec yields have declined by 63 bps and 28 bps, respectively, since February, over the same period, five-year AAA corporate bond yields have declined by 56 bps. Separately, Malhotra noted that while bank credit growth has slowed, the flow from non-bank sources has more than offset the decline in bank credit growth. Data shows that bank credit grew at 12.1 per cent during 2024-25 (FY25), slower than the 16.3 per cent growth in 2023-24 (FY24), though still higher than the average growth rate of 10.3 per cent recorded in the 10 years preceding FY25. While the flow of non-food bank credit during FY25 declined by about ₹3.4 trillion — from ₹21.4 trillion to nearly ₹18 trillion — the flow from non-bank sources more than made up for this shortfall. Thus, even though the growth rate of bank credit slowed last year, the overall flow of financial resources to the commercial sector rose from ₹33.9 trillion in FY24 to ₹34.8 trillion in FY25. This trend continues in the current financial year (2025-26) as well, Malhotra said. Latest RBI data suggests that the pace of bank credit growth rose to 9.8 per cent year-on-year in the fortnight ended July 11, while deposit growth remained steady at 10.1 per cent.
Time of India
5 days ago
- Business
- Time of India
Zerodha's new mutual fund has 40% exposure in golds & bonds. CEO Vishal Jain explains why
Zerodha Fund House , which has just launched a new Multi Asset Passive FoF (fund of funds), comes with 25% allocation to gold ETF and 15% to G-Sec ETFs. The remaining 60% is divided equally between largecap and midcap ETFs. "The 25% allocation to Gold ETF and 15% to G-sec ETF—together making up 40%—might seem high at first, but it's intentional to help lower overall portfolio volatility. Gold acts as a hedge during market turbulence, and government securities provide stability and predictability," Vishal Jain, CEO, Zerodha Fund House, said. Edited excerpts from a chat: In the new Multi Asset Passive FoF, you've stitched together equity, debt, gold, and G-secs into one basket. What exactly is the rationale behind this fund? Which class of investors is it best suited for? The Zerodha Multi Asset Passive FoF is basically a simple solution to invest your money across different asset classes — equity, gold, and government securities — all bundled into one easy-to-manage fund. The idea is to make investing simpler by taking away the hassle of deciding how much to put where and constantly keeping an eye on your portfolio. This fund gives you a ready-made mix that's diversified, balanced, and transparent. You don't have to juggle multiple funds or worry about rebalancing. It's like having a well-diversified portfolio on autopilot. This fund is great for beginners who want a straightforward way to start investing without getting overwhelmed. It's also handy for those who already have investments across various assets but want to bring it all under one roof to keep things tidy. In short, if you're looking for a simple, low-maintenance way to grow your money steadily over time with a mix of asset classes, this fund fits the bill perfectly. Multi-asset funds have been popular in the last few months given the sharp returns seen in gold. Any downturn in the gold cycle can impact returns. How do you deal with that? Well, different asset classes perform well at different points in time, and it's not easy to predict which one will do well going forward. Our approach with the Zerodha Multi Asset Passive FoF is not to time the market or react to the short-term performance of any single asset class, including gold. The objective is to provide a balanced portfolio with better risk-adjusted returns over the long run, not to chase the returns of a particular cycle. Tell us the rationale behind having 30% in Large Cap ETF, 30% Mid Cap ETF, 25% in Gold ETF and 15% in G-sec ETF. How do you justify 40% allocation in gold and government securities? Isn't that too high even for a moderate risk profile investor? The 30% allocation each to Large Cap and Mid Cap ETFs reflects the focus on long-term growth through equities, capturing both the stability of established companies and the higher growth potential of mid-sized firms. The 25% allocation to Gold ETF and 15% to G-sec ETF—together making up 40%—might seem high at first, but it's intentional to help lower overall portfolio volatility. Gold acts as a hedge during market turbulence, and government securities provide stability and predictability. This mix aims to strike the right balance: enough equity exposure for growth, combined with a strong dose of safer assets to manage risk. It's designed especially for investors who want steady wealth creation without facing the roller-coaster swings that a 100% equity portfolio can bring. What made you take equal exposure in largecaps and midcaps in the fund? We chose to give equal exposure to large-caps and mid-caps because together, they cover around 80-85% of the Indian equity market. This way, the fund offers broad and meaningful participation in the market. The equal split is a thoughtful balance—large-caps bring stability and steady returns since they are well-established companies, while mid-caps offer the potential for higher growth as they're often in a phase of expansion. Zerodha Fund House has seen impressive growth but competition is heating up amid the entry of newer players and most of them seem to be targeting the same passive fund space. Where do you think the moat lies in the passive fund management business? What will set you apart from your competitors? We see more competition as a positive—it means the market is growing and more Indians are getting access to better investment options, which is exactly what we want to see and have set out to achieve. We strongly believe that the future of investing is all about making the experience as simple and seamless as possible. That's why we've built intuitive solutions like our WhatsApp investment journey, developed entirely in-house, to make investing easy and accessible for everyone. We think this retail-first, tech-first approach will be a key differentiator for us that would help empower more people to start financial journeys with confidence. As passive funds are becoming popular we are also noticing a flood of ETF NFOs on every possible theme entering the market. How do you see this trend evolving and whether it is becoming a problem for investors? The rise of thematic and factor-based ETFs is a natural development as the passive investing space matures and investors look for more specific, targeted opportunities. These funds give you the chance to get exposure to particular sectors or investment strategies, which can be exciting and provide diversification beyond broad-market bets. That said, the performance of these niche ETFs tends to be cyclical and harder to predict. So, they might not be the best fit for everyone's core portfolio. Instead, it's usually smarter to keep them as a smaller, 'satellite' portion of your overall investments. That way, you can explore these specialized opportunities without putting your long-term financial goals at risk. What's your outlook on the product pipeline at a fund house level as well as industry level? Are we likely to see more thematic or factor-based ETFs in India, or will the focus remain on broad-based indices? From the start, our focus has been on offering basic 'building blocks' across equity, commodity, and debt segments, and then moving towards more solution-oriented products. The Zerodha Multi Asset Passive FOF is the first step towards introducing investors to simple solutioning and we will look at introducing more solutions going ahead besides expanding our offerings on the equity and debt side. Looking at the broader industry, there's been a strong surge in passive investing over the last few years and it's encouraging to see the adoption growing rapidly in India. We do expect more thematic and factor-based products to be launched as part of this innovation wave. So, while the industry will likely continue to innovate with more thematic and factor-based ETFs, the fundamental, long-term adoption will likely remain towards simple, broad-based passive funds that form the core of an investor's portfolio.
Time of India
29-07-2025
- Business
- Time of India
No plan to increase Rs 14.8L cr borrowing target, says official
The government plans to stick to its gross market borrowing target of ₹14.82 lakh crore for this fiscal year to avoid any negative surprises, despite expectations of increased defence spending in the wake of Operation Sindoor , a senior official said. The Centre has announced plans to borrow ₹8 lakh crore, or 54% of the full-year target, through dated securities in the fiscal first half. Net market borrowing for FY26 is budgeted at ₹11.54 lakh crore. Explore courses from Top Institutes in Please select course: Select a Course Category Digital Marketing Design Thinking Artificial Intelligence Others Public Policy Project Management Data Analytics Finance MBA Data Science Cybersecurity CXO Operations Management Healthcare Leadership Data Science others Technology PGDM Management Degree Product Management MCA healthcare Skills you'll gain: Digital Marketing Strategies Customer Journey Mapping Paid Advertising Campaign Management Emerging Technologies in Digital Marketing Duration: 12 Weeks Indian School of Business Digital Marketing and Analytics Starts on May 14, 2024 Get Details Skills you'll gain: Digital Marketing Strategy Search Engine Optimization (SEO) & Content Marketing Social Media Marketing & Advertising Data Analytics & Measurement Duration: 24 Weeks Indian School of Business Professional Certificate Programme in Digital Marketing Starts on Jun 26, 2024 Get Details "There is no plan to raise the full-year targets yet. The next review of the borrowing will take place in September when there will be more clarity," the official told ET. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Lujan De Cuyo: Unsold Furniture Liquidation 2024 (Prices May Surprise You) Unsold Furniture | Search Ads Learn More Undo The official said there could be re-prioritisation of spending plans in certain heads, keeping in mind the overall FY26 expenditure budget of ₹50.65 lakh crore. Live Events However, even if expenditure rises or revenue falls from the budgetary targets, the government can tap the National Small Savings Fund to partly bridge the deficit. The government therefore doesn't see sovereign market borrowings, crowding out private players at a time when it is encouraging them to step up investments and do their bit for economic growth. G-sec yield to ease The Centre's borrowing cost will likely ease further in the coming months, underpinned by strong macroeconomic fundamentals, adequate liquidity in the system, and a broader benign interest rate outlook, the official said. The 10-year benchmark G-sec yield has risen a tad over the past one month to 6.36% on Tuesday but it still remains about 60 basis points lower than a year before. Already, the central bank has trimmed the repo rate by 100 basis points since February to 5.5% now, with analysts expecting another 25 basis-point cut by October. This could have a benign impact on bond yields. Moreover, monsoon rains have been plentiful, and global crude oil prices have dropped below $70 per barrel after a brief surge in the aftermath of the Israel-Iran conflict, and will likely stay subdued for the rest of FY26. All these would augur well for the bond yield, they added. Importantly, the Central government has sharply hiked the capital expenditure budget for the ministries of railways and road transport and highways in recent years. So, public entities in these sectors are not resorting to extra-budgetary resources the way they used to do in the past, reducing pressure on the market, he said.
Economic Times
11-07-2025
- Business
- Economic Times
Dull loan growth, margin pressure, credit cost to weigh on bank earnings
Mumbai: The country's largest lender State Bank of India (SBI) is expected to report lacklustre results for the first quarter ended June, weighed down by a dip in margins and sluggish loan growth and fee income, with analyst estimates ranging from a 3% decline in profits to a 4.8% growth. ADVERTISEMENT Leading private lender HDFC Bank is seen posting a 4% to 6.3% rise in net profit, driven by a strong rise in core operating income, even as muted loan growth, margin compression, seasonally weak fee income, and elevated credit costs are expected to impact most banks, according to estimates from five brokerage houses. "We expect SBI to post muted loan and deposit growth with net interest margins (NIMs) declining by 13 basis points sequentially," Ankit Bhilani, analyst at Nomura, said in a note. "Credit cost is expected to remain contained at 0.5%." SBI's domestic NIM was at 3.35% in the first quarter of FY25. HDFC Bank's loan book rose 6.7% year-on-year in the June quarter to ₹26.53 lakh crore while deposits grew 16% to 27.64 lakh crore, it informed exchanges last week. "If the gap in loan and deposit growth has been offset by a rundown in borrowings, the margin trajectory (of HDFC Bank) could turn out to be healthier relative to peers-especially if the bank has continued to run down low-yielding corporate credit," said Pranav Gundlapalle, head of India financials at across the sector, banks are expected to report weak earnings for the June quarter, strong treasury gains, aided by a 25-basis point decline in 10-year G-sec yields, are expected to offer some cushion, according to Nomura. ADVERTISEMENT In the PSU banking space, Motilal Oswal projects modest profit after tax growth of 4.8% year-on-year, reflecting a decline in NIMs, normalised operating expenses, and higher provisions following the one-time reversal of provisioning on security receipts in Q4. Net interest income (NII) is also expected to remain flat year-on-year. Private sector banks may see a 2.5% decline in profit after tax, with pre-provision operating profit (PPOP) expected to grow only 4.2% year-on-year, according to the brokerage. NII for the sector is likely to grow just 3.1%, amid rising pressure on margins following the 100 basis points cut in the repo rate this year. Analysts expect NIMs across the sector to decline by 12 to 25 basis points. ADVERTISEMENT System-wide loan growth moderated to 10.6% year-on-year in the June quarter, with the MSME segment being the only outlier. Deposit growth is expected to remain subdued, ranging between 0% and 16% the asset quality front, fresh slippages in the first quarter are likely to remain elevated for banks with significant exposure to unsecured retail and microfinance segments. ADVERTISEMENT "NPA formation should inch up due to seasonality from the agri sector," said Bunty Chawla, analyst at IDBI Capital. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
11-07-2025
- Business
- Time of India
Dull loan growth, margin pressure, credit cost to weigh on bank earnings
Mumbai: The country's largest lender State Bank of India (SBI) is expected to report lacklustre results for the first quarter ended June, weighed down by a dip in margins and sluggish loan growth and fee income, with analyst estimates ranging from a 3% decline in profits to a 4.8% growth. Leading private lender HDFC Bank is seen posting a 4% to 6.3% rise in net profit, driven by a strong rise in core operating income, even as muted loan growth, margin compression, seasonally weak fee income, and elevated credit costs are expected to impact most banks, according to estimates from five brokerage houses. "We expect SBI to post muted loan and deposit growth with net interest margins (NIMs) declining by 13 basis points sequentially," Ankit Bhilani, analyst at Nomura, said in a note. " Credit cost is expected to remain contained at 0.5%." SBI's domestic NIM was at 3.35% in the first quarter of FY25. HDFC Bank's loan book rose 6.7% year-on-year in the June quarter to ₹26.53 lakh crore while deposits grew 16% to 27.64 lakh crore, it informed exchanges last week. Agencies "If the gap in loan and deposit growth has been offset by a rundown in borrowings, the margin trajectory (of HDFC Bank) could turn out to be healthier relative to peers-especially if the bank has continued to run down low-yielding corporate credit," said Pranav Gundlapalle, head of India financials at Bernstein. While across the sector, banks are expected to report weak earnings for the June quarter, strong treasury gains, aided by a 25-basis point decline in 10-year G-sec yields, are expected to offer some cushion, according to Nomura. In the PSU banking space, Motilal Oswal projects modest profit after tax growth of 4.8% year-on-year, reflecting a decline in NIMs, normalised operating expenses, and higher provisions following the one-time reversal of provisioning on security receipts in Q4. Net interest income (NII) is also expected to remain flat year-on-year. Private sector banks may see a 2.5% decline in profit after tax, with pre-provision operating profit (PPOP) expected to grow only 4.2% year-on-year, according to the brokerage. NII for the sector is likely to grow just 3.1%, amid rising pressure on margins following the 100 basis points cut in the repo rate this year. Analysts expect NIMs across the sector to decline by 12 to 25 basis points. System-wide loan growth moderated to 10.6% year-on-year in the June quarter, with the MSME segment being the only outlier. Deposit growth is expected to remain subdued, ranging between 0% and 16% year-on-year. On the asset quality front, fresh slippages in the first quarter are likely to remain elevated for banks with significant exposure to unsecured retail and microfinance segments. " NPA formation should inch up due to seasonality from the agri sector," said Bunty Chawla, analyst at IDBI Capital.
