MUMBAI: Indian bond yields may rise on 20 February as cash surpluses with banks are expected to dwindle in the next two weeks, reducing the money available to buy debt.
The second phase of a 50 basis points increase in the amount of cash banks need to keep with the central bank takes effect on 3 March. The first stage kicked in on Saturday.
The measure is expected to drain Rs.140 billion ($3.2 billion) from the banking system. This was the second time in two months when the central raised the cash reserve ratio to rein in inflation, which was at two-year high of 6.73 % on 3 Feb.