{"id":59434,"date":"2018-01-16T00:39:50","date_gmt":"2018-01-16T00:39:50","guid":{"rendered":"http:\/\/www.bnreport.com\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/"},"modified":"2018-01-16T00:39:51","modified_gmt":"2018-01-16T00:39:51","slug":"manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/","title":{"rendered":"Manage interest rate risk on your own: RBI’s Viral Acharya to banks"},"content":{"rendered":"

MUMBAI: The Reserve Bank of India<\/a> signalled it wouldn't intervene in the bond market<\/a> to ease the pain and bail-out banks<\/a> from adverse movement in interest rates and threw the ball in treasury departments' court saying instead of praying for regulatory relaxations they should equip themselves with derivative products. <\/p>\n

"Interest rate<\/a> risk of banks cannot be managed over and over again by their regulator," deputy governor Viral Achrya told the audience at the annual Fixed Income and Money Market Dealers Association meet. " Market liberalization does not just involve the regulator easing business processes, introducing new products and creating new markets; it also requires participants to take initiative to reskill themselves for constantly evolving market conditions and products." <\/p>\n

Dr. Acharya's strong message comes amid banks' lobbying with the regulator for easing provisioning norms for bond losses after the yields collapsed about 67 basis points in the December quarter. It has been a historical practice among Indian banks to seek relaxation whenever they were in losses, and the regulator in the past obliged. <\/p>\n

"The trend of regular use of ex post regulatory dispensation to ease the interest rate risk of banks is not desirable from the point of view of efficient price discovery in the G-Sec market and effective market discipline on the G-Sec issuer," said Dr. Acharya. <\/p>\n

Rating company ICRA has forecast that Indian banks may incur a mark-to-market loss of about Rs. 15,500 crore in the October-December quarter due to averse bond price movements. <\/p>\n

The risk management practices at Indian banks are rudimentary and the over reliance on government bonds<\/a> also exposes them to risks, he said. <\/p>\n

"The size of banking sector's balance-sheet exposure to G-Secs, and hence, its interest rate risk, is high in an absolute sense, and is relatively elevated, when measured in proportion to total assets, for public sector banks relative to private banks," said Acharya. "With relatively high duration and concentration of G-Secs in investment portfolio, bank earnings and capital remain exposed to adverse yield moves." <\/p>\n

Dr. Acharya drew on the experience of bond holders in peripheral European nations during the time of crisis when Greece defaulted. <\/p>\n

"The Greek default and ensuing sovereign debt crises in the GIIPS countries showed that banks having significant exposures to sovereign debt were the most susceptible to fluctuations in sovereign borrowing costs and faced attendant market plus funding consequences," he said. <\/p>\n

Sovereign bonds may appear to be safe and liquid, but need not necessarily be the same time and they also bear risks. <\/p>\n

"While sovereign bonds may be safer and more liquid than other instruments at a given point of time, there is no guarantee that they will remain so as both credit risk and liquidity risk of sovereign debt are dynamic in nature, and in fact, can shift deceptively so as these risks materialize from seemingly calm initial states," Acharya said."Interest rate risk of banks cannot be managed over and over again by their regulator," deputy governor Viral Achrya told <\/p>\n

<\/a><\/strong> <\/a><\/p>\n

Original Article<\/a><\/p>\n

[contf]
\n[contfnew]
\n <\/p>\n

ET Markets<\/a><\/h5>\n

[contfnewc]
\n[contfnewc]<\/p>\n","protected":false},"excerpt":{"rendered":"

MUMBAI: The Reserve Bank of India signalled it wouldn't..<\/p>\n","protected":false},"author":1,"featured_media":59435,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-59434","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nManage interest rate risk on your own: RBI's Viral Acharya to banks - Business News Report<\/title>\n<meta name=\"description\" content=\"MUMBAI: The Reserve Bank of India signalled it wouldn't..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Manage interest rate risk on your own: RBI's Viral Acharya to banks - Business News Report\" \/>\n<meta property=\"og:description\" content=\"MUMBAI: The Reserve Bank of India signalled it wouldn't..\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/\" \/>\n<meta property=\"og:site_name\" content=\"Business News Report\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Business-NewsReport-328225811095934\/\" \/>\n<meta property=\"article:published_time\" content=\"2018-01-16T00:39:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2018-01-16T00:39:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.bnreport.com\/wp-content\/uploads\/2018\/01\/rbi.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"672\" \/>\n\t<meta property=\"og:image:height\" content=\"504\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"infopal11\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@BNReport\" \/>\n<meta name=\"twitter:site\" content=\"@BNReport\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"infopal11\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/\"},\"author\":{\"name\":\"infopal11\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#\\\/schema\\\/person\\\/19d1c5a2dd7f60584a09de4a7805d68f\"},\"headline\":\"Manage interest rate risk on your own: RBI’s Viral Acharya to banks\",\"datePublished\":\"2018-01-16T00:39:50+00:00\",\"dateModified\":\"2018-01-16T00:39:51+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/\"},\"wordCount\":529,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.bnreport.com\\\/wp-content\\\/uploads\\\/2018\\\/01\\\/rbi.jpg\",\"articleSection\":[\"Finance\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/\",\"url\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/\",\"name\":\"Manage interest rate risk on your own: RBI's Viral Acharya to banks - Business News Report\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.bnreport.com\\\/wp-content\\\/uploads\\\/2018\\\/01\\\/rbi.jpg\",\"datePublished\":\"2018-01-16T00:39:50+00:00\",\"dateModified\":\"2018-01-16T00:39:51+00:00\",\"description\":\"MUMBAI: The Reserve Bank of India signalled it wouldn't..\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.bnreport.com\\\/wp-content\\\/uploads\\\/2018\\\/01\\\/rbi.jpg\",\"contentUrl\":\"https:\\\/\\\/www.bnreport.com\\\/wp-content\\\/uploads\\\/2018\\\/01\\\/rbi.jpg\",\"width\":672,\"height\":504},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"\u0627\u0644\u0631\u0626\u064a\u0633\u064a\u0629\",\"item\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Manage interest rate risk on your own: RBI’s Viral Acharya to banks\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#website\",\"url\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/\",\"name\":\"Business News Report\",\"description\":\"Latest News on the World of Politics & Business\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#organization\",\"name\":\"\u0628\u0632\u0646\u0633 \u0631\u064a\u0628\u0648\u0631\u062a \u0627\u0644\u0627\u062e\u0628\u0627\u0631\u064a\",\"url\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.bnreport.com\\\/wp-content\\\/uploads\\\/2020\\\/12\\\/LOGO2.png\",\"contentUrl\":\"https:\\\/\\\/www.bnreport.com\\\/wp-content\\\/uploads\\\/2020\\\/12\\\/LOGO2.png\",\"width\":200,\"height\":50,\"caption\":\"\u0628\u0632\u0646\u0633 \u0631\u064a\u0628\u0648\u0631\u062a \u0627\u0644\u0627\u062e\u0628\u0627\u0631\u064a\"},\"image\":{\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/Business-NewsReport-328225811095934\\\/\",\"https:\\\/\\\/x.com\\\/BNReport\",\"https:\\\/\\\/www.instagram.com\\\/business.newsreport\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/#\\\/schema\\\/person\\\/19d1c5a2dd7f60584a09de4a7805d68f\",\"name\":\"infopal11\",\"url\":\"https:\\\/\\\/www.bnreport.com\\\/en\\\/author\\\/infopal11\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Manage interest rate risk on your own: RBI's Viral Acharya to banks - Business News Report","description":"MUMBAI: The Reserve Bank of India signalled it wouldn't..","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/","og_locale":"en_US","og_type":"article","og_title":"Manage interest rate risk on your own: RBI's Viral Acharya to banks - Business News Report","og_description":"MUMBAI: The Reserve Bank of India signalled it wouldn't..","og_url":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/","og_site_name":"Business News Report","article_publisher":"https:\/\/www.facebook.com\/Business-NewsReport-328225811095934\/","article_published_time":"2018-01-16T00:39:50+00:00","article_modified_time":"2018-01-16T00:39:51+00:00","og_image":[{"width":672,"height":504,"url":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2018\/01\/rbi.jpg","type":"image\/jpeg"}],"author":"infopal11","twitter_card":"summary_large_image","twitter_creator":"@BNReport","twitter_site":"@BNReport","twitter_misc":{"Written by":"infopal11","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#article","isPartOf":{"@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/"},"author":{"name":"infopal11","@id":"https:\/\/www.bnreport.com\/en\/#\/schema\/person\/19d1c5a2dd7f60584a09de4a7805d68f"},"headline":"Manage interest rate risk on your own: RBI’s Viral Acharya to banks","datePublished":"2018-01-16T00:39:50+00:00","dateModified":"2018-01-16T00:39:51+00:00","mainEntityOfPage":{"@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/"},"wordCount":529,"commentCount":0,"publisher":{"@id":"https:\/\/www.bnreport.com\/en\/#organization"},"image":{"@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#primaryimage"},"thumbnailUrl":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2018\/01\/rbi.jpg","articleSection":["Finance"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/","url":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/","name":"Manage interest rate risk on your own: RBI's Viral Acharya to banks - Business News Report","isPartOf":{"@id":"https:\/\/www.bnreport.com\/en\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#primaryimage"},"image":{"@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#primaryimage"},"thumbnailUrl":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2018\/01\/rbi.jpg","datePublished":"2018-01-16T00:39:50+00:00","dateModified":"2018-01-16T00:39:51+00:00","description":"MUMBAI: The Reserve Bank of India signalled it wouldn't..","breadcrumb":{"@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#primaryimage","url":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2018\/01\/rbi.jpg","contentUrl":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2018\/01\/rbi.jpg","width":672,"height":504},{"@type":"BreadcrumbList","@id":"https:\/\/www.bnreport.com\/en\/manage-interest-rate-risk-on-your-own-rbis-viral-acharya-to-banks\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"\u0627\u0644\u0631\u0626\u064a\u0633\u064a\u0629","item":"https:\/\/www.bnreport.com\/en\/"},{"@type":"ListItem","position":2,"name":"Manage interest rate risk on your own: RBI’s Viral Acharya to banks"}]},{"@type":"WebSite","@id":"https:\/\/www.bnreport.com\/en\/#website","url":"https:\/\/www.bnreport.com\/en\/","name":"Business News Report","description":"Latest News on the World of Politics & Business","publisher":{"@id":"https:\/\/www.bnreport.com\/en\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.bnreport.com\/en\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.bnreport.com\/en\/#organization","name":"\u0628\u0632\u0646\u0633 \u0631\u064a\u0628\u0648\u0631\u062a \u0627\u0644\u0627\u062e\u0628\u0627\u0631\u064a","url":"https:\/\/www.bnreport.com\/en\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.bnreport.com\/en\/#\/schema\/logo\/image\/","url":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2020\/12\/LOGO2.png","contentUrl":"https:\/\/www.bnreport.com\/wp-content\/uploads\/2020\/12\/LOGO2.png","width":200,"height":50,"caption":"\u0628\u0632\u0646\u0633 \u0631\u064a\u0628\u0648\u0631\u062a \u0627\u0644\u0627\u062e\u0628\u0627\u0631\u064a"},"image":{"@id":"https:\/\/www.bnreport.com\/en\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Business-NewsReport-328225811095934\/","https:\/\/x.com\/BNReport","https:\/\/www.instagram.com\/business.newsreport"]},{"@type":"Person","@id":"https:\/\/www.bnreport.com\/en\/#\/schema\/person\/19d1c5a2dd7f60584a09de4a7805d68f","name":"infopal11","url":"https:\/\/www.bnreport.com\/en\/author\/infopal11\/"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/posts\/59434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/comments?post=59434"}],"version-history":[{"count":0,"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/posts\/59434\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/media\/59435"}],"wp:attachment":[{"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/media?parent=59434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/categories?post=59434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bnreport.com\/en\/wp-json\/wp\/v2\/tags?post=59434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}