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RBI Bonds: A Game Changer in India’s Financial Landscape as Yields Plummet
The latest developments regarding RBI bonds highlight a significant shift in India’s financial landscape, driven by expectations of policy easing from the Reserve Bank of India (RBI). Recently, the benchmark 10-year government bond yield fell to a three-year low of 6.60%, reflecting market optimism for an upcoming interest rate cut during the RBI’s monetary policy meeting on April 9, 2025. This drop in yields is largely attributed to aggressive liquidity measures by the RBI, which has infused over ₹6.8 trillion into the banking system this quarter through various operations.
Investors are particularly focused on the Government of India Floating Rate Bond 2033, which now offers an attractive interest rate of 8.34% per annum. This bond’s interest rate is linked to the Weighted Average Yield of recent treasury bill auctions, ensuring that returns remain competitive as market conditions fluctuate5. The floating nature of these bonds provides a hedge against rising interest rates, as coupon payments increase accordingly, making them an appealing choice for those seeking stable income amidst volatile economic conditions.
As the RBI prepares to announce its borrowing plan for the next fiscal period, market participants are keenly awaiting further guidance on how these developments will influence investment strategies moving forward.
Personal Finance
- EPFO to integrate UPI, expand pension access, and enhance EPI benefits: EPFO is set to integrate UPI for claims processing by May 2025, speeding up transactions and enabling auto-claims. The new system, alongside pension reforms and the expanded Employment Linked Incentive scheme, aims to enhance benefits for workers and pensioners. Read here
- Balance transfer or loan refinancing? A guide to choosing the best debt management option: Balance transfers and loan refinancing are key debt management tools. Balance transfers help consolidate credit card debt with low interest, while refinancing offers better terms for larger loans. Find out which option could save you money and reduce your debt! Read here
- You can now have up to 4 nominees for bank accounts. Here are the new rules: The Banking Laws (Amendment) Bill now lets you appoint up to four nominees for your bank accounts! Choose from simultaneous or successive nominations to streamline asset transfer and avoid future disputes. Read here
Investing
- How goal-based investments are taking a front seat in wealth management: Goal-based investing tailors’ financial strategies to individual aspirations, aligning investments with specific goals like education or retirement. Discover how goal-based investing can help you achieve your financial dreams with personalized strategies tailored to your unique goals! Read here
- Why Trend Following is Harder Than it Looks: Trend following, like using the 200-day moving average, helps navigate volatility but struggles in bull markets, leading to false positives, missed recoveries, and delayed gains. Want to know why? Read here
- Is your wealth manager still ‘buying the dip’? Is buying the dip still a winning strategy? Explore the ongoing debate among financial advisors on whether it’s wise to continue this approach or reconsider amid changing market dynamics. Read here
Economy & Sector
- Five years after lockdown: Is India prepared for another health crisis? Five years after India’s first Covid lockdown, it’s time to evaluate the country’s healthcare preparedness. Despite some progress, such as increased vaccination and reduced out-of-pocket spending, healthcare spending remains low and infrastructure inadequate. Will India meet future health challenges? Read here
- India’s GDP on track to outpace Japan in 2025, Germany by 2027: IMF India’s GDP has doubled in the past decade, growing 105% to reach $4.3 trillion, positioning it as the world’s fifth-largest economy. With continued growth, India could surpass Japan and Germany by 2027. Inflation is stable at 3.61%, and per capita income stands at $11,940. Discover what this means for India’s future and its global standing! Read here
- India: Why are private firms not investing despite record profits? India’s private companies have been hesitant to invest in new factories and businesses due to weak domestic consumption, low demand, global uncertainties, and overcapacity, despite infrastructure improvements and tax cuts. What will it take for India to unleash its private sector’s investment potential? Read here
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That’s it from our side. Have a great weekend ahead!
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The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.