On recovery being in place or it being pent-up demand:
We have been tracking a list of high-speed indicators. In almost all segments, we are seeing a growth of demand. It has now moved from pent-up demand and, as the lockdown gets lifted, the demand curve is expected to be sustained. On treating the management of yields as public good: G-sec yields are the benchmark on which corporate bonds are priced and bank lending is influenced. Eventually, G-sec yields impact a wider section of the financial market.
On plans to allow retail investment in government bonds:
It has been the endeavour of the RBI and the government to make G-secs directly accessible to retail investors. So far, investors have been able to invest through aggregators. Now, they will be able to open an account directly in the RBI system. There are very few countries where investors can directly purchase government bonds. The US and Brazil have done that. We are the first in Asia.
On government bonds crowding out other saving instruments:
As the GDP grows and the economy comes back to a higher growth trajectory, the volume of savings will expand. Banks have many services to render, so it will not undermine the flow of deposits. Even today, small savings offer a higher return than banks, notwithstanding that bank deposits have grown 11.3% this year.
On market expectations of higher bond purchases by RBI:
Sometimes, the market takes a little more time to understand our communication. We have said open market operations (OMOs) will be enhanced, but the situation is evolving, and we have a mix between the operation twist (simultaneous purchase and sale of long- & short-term bonds) and OMO purchase. The decision (on size) was based on feedback as the system was flush with liquidity.
On the revival of PMC Bank:
Three bids have been received for PMC Bank. The cooperative bank is evaluating the offers which were received on February 1. After evaluation, they will approach the RBI and it will require some regulatory clearances.
