<p class="title">State-run banks - already bruised by the sprawling Punjab National Bank fraud case and soaring provisions for bad loans - are facing much higher losses on their bond holdings, said brokerage firm Credit Suisse.</p>.<p class="bodytext">The brokerage warned that state-run banks, which are typically the largest investors in sovereign securities, could lose more than Rs 20,0000 crore (approximately $3.1 billion) in the January-March quarter, due to a continued spike in bond yields, and as they held more bonds than are required by the regulator.</p>.<p class="bodytext">That would be three times more than their losses on bonds in the preceding quarter.</p>.<p class="bodytext">The brokerage report, coupled with a stream of negative news on the banking sector, sent financial shares tumbling further on Wednesday.</p>.<p class="bodytext">This comes close on the heels of news on Tuesday that Indian investigators have widened a probe into the $2 billion fraud in Punjab National Bank - the biggest bank fraud in the country's history by summoning top management of more banks.</p>.<p class="bodytext">It also adds to the woes of the sector which saw sour loans hit a record of close to $150 billion in 2017, triggering a $32 billion bailout announcement from the government.</p>.<p class="bodytext">New Delhi is in the process of injecting $14 billion of the recapitalisation outlay into the banks during the current quarter, which is also the deadline for the lenders to achieve a central bank-mandated minimum 50% provisioning on the loans to companies in bankruptcy court.</p>.<p class="bodytext">"Rising bond losses will add to concerns about the adequacy of the recap plan," Credit Suisse analysts, led by Ashish Gupta wrote in a March 6 note to clients, adding they continued to prefer private sector banks despite a steep corrections in the state bank stocks.</p>.<p class="bodytext">State bank shares fell 3.7% by 0625 GMT, extending losses from the previous session. The index has slumped more than a third since hitting a multi-year high on October 26 last year after the recapitalisation announcement.</p>.<p class="bodytext">The benchmark 10-year bond yield has risen as much as 48 basis points so far in Jan-March, leaving bond prices on track for their third straight quarter of losses.</p>
<p class="title">State-run banks - already bruised by the sprawling Punjab National Bank fraud case and soaring provisions for bad loans - are facing much higher losses on their bond holdings, said brokerage firm Credit Suisse.</p>.<p class="bodytext">The brokerage warned that state-run banks, which are typically the largest investors in sovereign securities, could lose more than Rs 20,0000 crore (approximately $3.1 billion) in the January-March quarter, due to a continued spike in bond yields, and as they held more bonds than are required by the regulator.</p>.<p class="bodytext">That would be three times more than their losses on bonds in the preceding quarter.</p>.<p class="bodytext">The brokerage report, coupled with a stream of negative news on the banking sector, sent financial shares tumbling further on Wednesday.</p>.<p class="bodytext">This comes close on the heels of news on Tuesday that Indian investigators have widened a probe into the $2 billion fraud in Punjab National Bank - the biggest bank fraud in the country's history by summoning top management of more banks.</p>.<p class="bodytext">It also adds to the woes of the sector which saw sour loans hit a record of close to $150 billion in 2017, triggering a $32 billion bailout announcement from the government.</p>.<p class="bodytext">New Delhi is in the process of injecting $14 billion of the recapitalisation outlay into the banks during the current quarter, which is also the deadline for the lenders to achieve a central bank-mandated minimum 50% provisioning on the loans to companies in bankruptcy court.</p>.<p class="bodytext">"Rising bond losses will add to concerns about the adequacy of the recap plan," Credit Suisse analysts, led by Ashish Gupta wrote in a March 6 note to clients, adding they continued to prefer private sector banks despite a steep corrections in the state bank stocks.</p>.<p class="bodytext">State bank shares fell 3.7% by 0625 GMT, extending losses from the previous session. The index has slumped more than a third since hitting a multi-year high on October 26 last year after the recapitalisation announcement.</p>.<p class="bodytext">The benchmark 10-year bond yield has risen as much as 48 basis points so far in Jan-March, leaving bond prices on track for their third straight quarter of losses.</p>