Diversification of government bond holding has helped govt lower borrowing costs: Study
The study reveals that nonbanks are more responsive to changes in G-Sec yields than banks. Overall, a one per cent increase in G-Sec supply is found to be associated with a 9.5 to 10 basis points increase in long term yields. Non-bank entities absorbed a significant portion of newly issued sovereign debt during the Covid-19 pandemic. Nonetheless, banks still dominate the ownership of g-secs in India.
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