Latest news with #G-secs
Time of India
26-06-2025
- Business
- Time of India
Are PPF, NSC and other small savings schemes headed for historic low interest rates? Govt to decide next week
RBI has cut repo rate by 1% Academy Empower your mind, elevate your skills Why bond yield and repo rate cuts matter Will interest rate on PPF, NSC, SCSS and other small savings be cut? What should investors do before a small savings rate cut happens? The interest rates for PPF, NSC and other small savings schemes are set to be reviewed on June 30, 2025. The new rates will take effect for the July-September quarter of FY 2025-26. So far this year, the interest rates for Post Office savings schemes, including the Sukanya Samriddhi Yojana and the Senior Citizens Savings Scheme, have remained unchanged. But this could change starting July 1, Reserve Bank of India (RBI) has cut the repo rate thrice since the start of 2025. The central bank first cut the repo rate by 25 basis points in February, then again by 25 basis points in April and by 50 basis points in June. To date, the central bank has cut the repo rate by 1%.The banks have reduced the interest rate on fixed deposits in response to the repo rate cut. Some banks have also discontinued their special FDs, which offered higher interest rates compared to normal bank FDs for a specified 1% cut in repo rates has also brought down bond yields. Investors need to keep in mind that there is a positive correlation between bond yields and the RBI's policy rates. So, whenever market expects the RBI to reduce the repo rate, bond yields tend to drop as per data from the 10-year G-sec bond yield was at 6.779% on January 1, 2025. But by June 24, 2025, it had fallen to 6.247%. This means the bond yield has decreased by 0.532% so far and a further downward adjustment cannot be ruled interest rate on the Post Office Savings Scheme is determined on the basis of the recommendations of the Shyamala Gopinath Committee. According to the recommendations accepted by the Finance Ministry, secondary market yields on Central Government Securities of comparable maturities should serve as benchmarks for the interest rates on various small savings instruments, along with a positive spread of 25 basis means that the interest rate of a 5-year time deposit should be based on the yield of 5-year G-secs prevailing in the secondary market plus 25 basis PPF, the average yield of 10-year G-sec between March 24, 2025, and June 24, 2025, is 6.325%, according to Adding 25 bps on this, will bring the PPF interest rate to 6.575% as per the formula recommended by the committee. Currently, PPF offers 7.10% to the by the set methodology, a repo rate cut and a fall in bond yield indicate that interest rate on small savings scheme may also be cut keeping in view of the prevailing interest rate in the market. However, this does not always reflect in the final decision taken by the Wealth Online spoke to experts to determine whether interest rates on PPF, NSC, and other small savings are likely to be cut. Here's what they have to say:Given its focus on fostering economic growth through a more accommodative monetary policy, the Reserve Bank of India (RBI) reduced the repo rate by 0.5% on June 6th, bringing the total reduction to 1% in 2025. As a result, interest rates for small savings scheme are likely to be lowered. So, a reduction in interest rates for small savings schemes is anticipated. Since the RBI is prioritising growth through lower borrowing costs, a corresponding rate cut for small savings schemes is expected in the next update. The final decision will depend on the government's quarterly review and prevailing economic the Reserve Bank of India cutting the repo rate by a cumulative 100 basis points in 2025, attention is now on the upcoming quarterly revision of small savings scheme (SSS) interest rates. SSS rates, while administratively set, are typically aligned with prevailing interest rate trends and yields on government securities. In recent weeks, several banks have already begun reducing their fixed deposit rates, signalling broader rate transmission across the financial system. Given the sharp monetary easing and the government's emphasis on fiscal prudence, it is likely that SSS rates for instruments such as the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and National Savings Certificate (NSC) could be cut by 25-50 basis interest rates on small svaings schemes usually move with market trends, but the decision is not automatic as while deciding rates, the government also takes note of savers' year, the RBI has cut the repo rate by 1%, pushing overall interest rates lower. Normally, this would mean small savings rates could drop too, to stay in line with bank FDs and bonds. But there's a catch: these schemes are a lifeline for retirees, pensioners, and middle-class households. A big cut could hurt their income, especially when inflation is low and bank FD rates are already falling. The government also keeps political and social factors in mind, after all, millions depend on these schemes. So, while a small cut (say, 0.1-0.3%) is possible, a sharp reduction seems unlikely. The government might even hold rates steady to support savers, now that elections are over and inflation isn't a worry. A minor trim could happen, but don't expect a major drop. The government will likely balance market trends with savers' planning to invest in various small savings schemes should do so on or before June 30, 2025. This is because any rate cut will take effect from July 1, you invest in time deposits, recurring deposits, Senior Citizens Savings Scheme, Monthly Income Account, National Savings Certificate and Kisan Vikas Patra, on or before June 30, 2025, your investment will be locked at current high interest rate and will not be impacted by subsequent rate cut effective from July 1. This is because once the investment is made, then interest rates are locked till maturity investment in PPF and SSY will be impacted, as interest on account balances keep changing with time and are calculated on a monthly says, "Investors may consider locking into current Small Savings Scheme rates before the revision. Additionally, as interest rates trend lower, long-duration debt funds and target maturity bonds become more attractive for investors seeking to preserve real returns in a softening rate environment."
Economic Times
20-06-2025
- Business
- Economic Times
Will eased KYC norms revive foreign investment in Indian sovereign bonds?
Mumbai: India's regulatory latitude on compliance and KYC norms for foreign funds buying only sovereign bonds is expected to burnish the allure of an asset class already featuring in global gauges, although an immediate halt to recent outflows would require worldwide rate dynamics and geopolitical risks to settle in favour of the emerging markets. ADVERTISEMENT "Considering that the Indian economy is growing and the market is coming up the maturity curve with inclusion in global indices, it is quite logical for making the investing route easier for FPIs," said Divaspati Singh, partner at Khaitan & Co. According to a senior official at a foreign bank, there has been a long-pending demand to ease the operational issues around reporting and KYC. On Wednesday, Sebi approved the proposal to relax certain regulatory requirements for all existing and prospective foreign portfolio investors that exclusively invest in G-Secs. Overseas investors have been shedding Indian bonds of late. Easing of the KYC norms are unlikely to lead to an immediate trend reversal. "While this may not see a sudden spurt of inflows, it does make life easier for FPIs participating only in G-secs," Singh overseas banker expects long-term benefits from Sebi's move. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
20-06-2025
- Business
- Time of India
Will eased KYC norms revive foreign investment in Indian sovereign bonds?
Mumbai: India's regulatory latitude on compliance and KYC norms for foreign funds buying only sovereign bonds is expected to burnish the allure of an asset class already featuring in global gauges, although an immediate halt to recent outflows would require worldwide rate dynamics and geopolitical risks to settle in favour of the emerging markets. "Considering that the Indian economy is growing and the market is coming up the maturity curve with inclusion in global indices, it is quite logical for making the investing route easier for FPIs," said Divaspati Singh, partner at Khaitan & Co. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Chi phí cấy ghép răng là bao nhiêu vào năm 2025 (kiểm tra giá) Cấy ghép răng | Quảng cáo tìm kiếm Tìm hiểu thêm Undo According to a senior official at a foreign bank, there has been a long-pending demand to ease the operational issues around reporting and KYC. On Wednesday, Sebi approved the proposal to relax certain regulatory requirements for all existing and prospective foreign portfolio investors that exclusively invest in G-Secs. Bonds Corner Powered By Will eased KYC norms revive foreign investment in Indian sovereign bonds? India's relaxation of KYC norms for foreign funds investing solely in sovereign bonds aims to enhance the appeal of this asset class, already included in global indices. While easing operational issues is a welcome step, an immediate reversal of recent outflows hinges on favorable global rate dynamics and reduced geopolitical risks. Experts anticipate long-term benefits for FPI participation in G-secs. India's Larsen & Toubro may explore another ESG bond issue after debut attracts premium, spokesperson says Indian bond yields marginally higher; focus on oil, debt supply Sebi eases norms for foreign investors who only buy government bonds Lending yields set to shrink in FY26 as banks play it safe Browse all Bonds News with Overseas investors have been shedding Indian bonds of late. Easing of the KYC norms are unlikely to lead to an immediate trend reversal. "While this may not see a sudden spurt of inflows, it does make life easier for FPIs participating only in G-secs," Singh said. An overseas banker expects long-term benefits from Sebi's move. Live Events
The Hindu
18-06-2025
- Business
- The Hindu
Founders can now hold employee stock options post listing, says SEBI
In a bid to increase ease of doing business for market participants, the Securities and Exchange Board of India (SEBI) has approved proposals to allow founders to hold employee stock options even after listing, relax regulations for alternative investment funds (AIF), and allow public sector undertakings (PSUs) with minimal public shareholding to delist, among other actions. In its board meeting that concluded on Wednesday, the markets regulator said that founders or promoters can now continue to benefit from employee stock options even after listing, if they started receiving them at least one year prior to filing for IPOs. Aiding reverse flipping Moreover, compulsory convertible securities (CCS) will be exempted from a minimum shareholding period of one year, akin to equity shares. This will assist companies contemplating reverse flipping. Reverse flipping is when Indian start-ups, originally incorporated overseas, move their headquarters and ownership back to India. The regulation will now also include relevant persons other than just the founders. Category I and II AIFs can now offer co-investment schemes (CIV) to 'facilitate AIFs and investors to co invest' and 'support capital formation in unlisted companies,' according to a statement from SEBI. This initiative is in addition to the existing opinion for accredited investors to co-invest in unlisted entities through portfolio management system (PMS). Angel investors The board also approved proposals to ensure that only angel investors would need to be accredited investors (AI) now. Moreover, AIs will be included as qualified institutional buyers (QIBs) for the limited purpose of investments into angel funds. The floor and cap on investments by angel investors has been changed to ₹10 lakh to ₹25 crore. Earlier, this threshold was ₹25 lakh to ₹10 crore. In addition to these, SEBI also offered settlement opportunity for venture capitalists (VCs) to migrate to AIF regulations. The markets watchdog has also enabled PSUs, in which the Government of India holds more than 90% stake, to be delisted. 'There are five such companies,' SEBI Chairperson Tuhin Kanta Pandey said during a briefing. In addition to these, the regulator also brought in other regulations that relaxed compliance for foreign portfolio investments (FPIs) exclusively investing in G-secs, simplified documents for qualified institutional placements (QIPs), and rationalisation of merchant banking regulations.
India Gazette
18-06-2025
- Business
- India Gazette
Govt's net borrowings under control, show steady trend: SBI Report
New Delhi, June 18 (ANI): India's market borrowing program has seen a stable and orderly evolution in recent years, with net borrowings remaining under control despite the country's growing economic needs. Data from a report by SBI showed that the government is actively managing its debt through various instruments while adhering to fiscal discipline under the FRBM Act. It said, 'G sec borrowing trend.... Keeping the borrowings in check.' As per the data, gross market borrowing through government securities (G-secs) is estimated at Rs 14.8 lakh crore in the Budget Estimates for FY26, while net borrowing is projected at Rs 11.5 lakh crore. So far in FY26, the government has raised Rs 3.2 lakh crore as gross borrowing, and Rs 2.4 lakh crore as net borrowing. In the previous financial year (FY25), gross borrowing stood at Rs 14.0 lakh crore, while net borrowing was Rs 10.7 lakh crore. Similarly, FY24 had seen gross borrowing of Rs 15.4 lakh crore and net borrowing of Rs 10.7 lakh crore. This shows that while gross borrowing fluctuates with fiscal needs, net borrowing is being kept largely in check. The report also highlighted that the outstanding stock of government debt through G-secs has steadily risen over the past decade, from Rs 41.6 lakh crore in FY15 to Rs 114.5 lakh crore so far in FY26. However, this surge has been managed with caution, and the government is making genuine efforts to reduce overall debt levels. The debt-to-GDP ratio is estimated at 57.1 per cent for 2024-25 and is projected to decline to 56.1 per cent in 2025-26, as per the FRBM guidelines. To fine-tune its borrowing profile, the report mentioned that the government is also using debt switch and buyback operations. In FY26, switch borrowings are budgeted at Rs 2.5 lakh crore, and buybacks have already accounted for Rs 0.5 lakh crore. In past years, switch operations ranged from Rs 0.3 to Rs 2.0 lakh crore, depending on the fiscal strategy. In the context of banking and finance, a debt switch typically refers to a transaction where a borrower exchanges one type of debt security for another, often with the goal of restructuring debt obligations or managing liquidity. While the buyback operations typically refer to the repurchase of government securities or corporate bonds by central bank (RBI). On this the SBI report noted a dichotomy in current trends. While issuing more short-term papers may support immediate funding needs for a fast-growing economy, it could lead to higher redemption pressure in the medium term. The report outlined that while India's public debt has grown in absolute terms, the government's prudent fiscal management, stable borrowing trends, and strategic tools like debt switches and buybacks are helping maintain long-term sustainability. With net borrowings under control and efforts aligned with FRBM targets, the overall debt outlook looks disciplined. (ANI)
