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Rising bond yields raise mark-to-market losses risk for India’s PSU banks
India’s benchmark 10-year yield climbed from 6.7% at June-end to 7.2% at September-end, pressuring PSU banks’ bond portfolios via falling bond prices.
LiveMint Markets said India’s PSU banks face a bigger risk from rising government bond yields than from potential farm loan waiver schemes, because higher yields typically push bond prices lower and create mark-to-market losses in banks’ bond portfolios.
The outlet pointed to a sharp move in India’s 10-year government bond yield, which rose from 6.7% at June-end to 7.2% at September-end.
It also noted that drought declarations have been made in about three-fourths of talukas in Maharashtra and Karnataka for the 2026 kharif crop season, with more states potentially following, which could lead central or state governments to announce farm loan waivers.
LiveMint Markets added that PSU lenders are more exposed to agriculture lending than private banks, citing that in FY26, agriculture accounted for 10% of State Bank of India’s domestic loan book, versus about 4% for HDFC Bank, excluding agriculture-related trading activities.