Reliance Buys ₹10,000 Cr in Govt Bonds Amid Softer Yield Expectations

Reliance Industries Ltd. (RIL) has made large purchases of government securities from the secondary market, reportedly amounting to ₹7,000-₹10,000 crore during the second week of April. 

This activity followed the Reserve Bank of India’s (RBI) monetary policy update on April 9, where the central bank cut the policy repo rate. The buying is seen as a response to expectations of a further decline in bond yields.

As of 12:41 pm on April 22, 2025, Reliance Industries share price were trading at ₹1,298.60, up 0.24% for the day, but down 3.33% over the past six months and 12.25% over the past year.

10-Year Bond Yield at Lows

The benchmark 10-year government bond yield has been trading at multi-year lows. With the RBI indicating the possibility of further rate cuts during the year, market participants are expecting two additional reductions in the policy rate. This has led to increased interest in government securities, particularly from institutional buyers like RIL.

Regulatory Adjustment on Bank Deposits

On the regulatory front, the RBI has revised its earlier proposal concerning digitally linked retail deposits. Banks are now required to maintain a buffer of 2.5% for such deposits, down from the 5% run-off factor proposed in July. This change applies to internet and mobile banking-accessible deposits and is intended to be implemented within one year.

Effect on Bank Liquidity Coverage

According to the RBI, the change in the buffer requirement is expected to improve banks’ Liquidity Coverage Ratio (LCR) by approximately 6 percentage points as of the December quarter. The central bank also stated that all banks continue to meet the minimum regulatory LCR requirements.

Read more: Reliance Share Price in Focus: Q4 Results, Dividend, and Fundraising Announcement on April 25.

Context of Run-Off Risk

The original proposal aimed to address risks of deposit “run-off”, when funds are quickly withdrawn and redirected into higher-yielding assets. The revised rule lowers the capital buffer burden on banks while maintaining oversight over potential liquidity risks.

Conclusion

The combination of lower policy rates, softening bond yields, and regulatory easing appears to be driving activity in the bond market. RIL’s recent investment aligns with this environment, while banks are adjusting to updated compliance norms over the next year.

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