.............What this episode highlights is that the bond market, in today’s fluid scenario, offers no more certainty than that for ‘risky’ equities. It reinforces the need for banks to set prudential internal limits on their treasury activities, in terms of the extent of their bond portfolios exposed to yield and price swings. For now, signals from the US Fed, rather than the needs of domestic banks or their borrowers, is what is going to influence RBI policy.
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1 comment:
The milking cow on the banks' balance sheets is no longer going to be there in a bond market that is not mature and that goes by what the US Fed needs. Banks would do well to go back and rely on their credit markets and book their profits and not NPAs through better due diligence.
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