Archive · 21 Nov 2025
Bank Treasuries Cautious on G-Sec Purchases
Bank treasuries are being careful about buying Government Securities (G-Secs) because of possible extra borrowing due to salary increases, stricter investment rules, and higher expected inflation.
This has caused G-Sec yields to go up even though the repo rate has been lowered and inflation is low.
Bank treasuries' appetite for Government Securities (G-Secs) has decreased due to various factors
G-Sec yields have increased despite repo rate cuts and low retail inflation
Banks' net purchase of G-Secs has significantly reduced, and an auction was cancelled by RBI
Implementation of 8th Pay Commission recommendations may lead to additional borrowing
Tighter investment guidelines and higher inflation projection for Q1FY27 are also influencing decisions
- Who
- Bank treasuries
- What
- Have reduced their appetite for Government Securities (G-Secs)
- When
- Since May 2025
- Where
- India
- Why
- Due to potential fiscal impact of salary increases, stricter investment guidelines, and higher inflation projection
Cautious Banks
Government & RBI
G-Sec Yields
Cautious Banks
Banks want higher yields (lower prices) for G-Secs
Government & RBI
Government and RBI want to maintain lower yields (higher prices) to facilitate borrowing
- Repo Rate Cut
- 100 basis points (bps) in Feb-June 2025
- Retail Inflation (Oct 2025)
- 0.3 per cent
- Bank's Net Purchase of G-Secs (Nov 19, 2025)
- ₹849 crore
- Cancelled G-Sec Auction Amount
- ₹11,000 crore
- Expected Inflation for Q1FY27
- 4.5 per cent