GOVERNMENT OF INDIA BOND RATES – AS ON 31ST DECEMBER 2020
The yield rates below are comprised of Indian government bills and bonds. The rates given below are based on the benchmark FIMMDA (Fixed Income Markets and Derivatives Association of India) indices. FIMMDA is the nodal agency designated by RBI to set financial benchmarks, and the benchmarks are published by Financial Benchmark India Pvt. Ltd (FBIL), authorised by RBI for benchmark administration activities relating to the valuation of Government of India Securities.
| Year | Tenor | Yield |
G-Sec | 3M | 3.20% | |
G-Sec | 6M | 3.36% | |
G-Sec | 2021 | 1Y | 3.59% |
G-Sec | 2022 | 2Y | 3.93% |
G-Sec | 2023 | 3Y | 4.45% |
G-Sec | 2024 | 4Y | 4.98% |
G-Sec | 2025 | 5Y | 5.37% |
G-Sec | 2026 | 6Y | 5.66% |
G-Sec | 2027 | 7Y | 6.01% |
G-Sec | 2028 | 8Y | 6.27% |
G-Sec | 2029 | 9Y | 6.20% |
G-Sec | 2030 | 10Y | 6.13% |
G-Sec | 2031 | 11Y | 6.60% |
G-Sec | 2032 | 12Y | 6.71% |
G-Sec | 2033 | 13Y | 6.63% |
G-Sec | 2034 | 14Y | 6.59% |
G-Sec | 2035 | 15Y | 6.70% |
G-Sec | 2039 | 19Y | 7.07% |
G-Sec | 2044 | 24Y | 7.17% |
G-Sec | 2050 | 30Y | 6.81% |
G-Sec – Government of India dated Securities.
Yield indicates annualised yield as on 31st December 2020.
Sources: https://www.fbil.org.in/#/home
NOTES ON BOND RATES
- Discount rate used in Actuarial Valuation is based on bond yields as on end of balance sheet reporting period – as Per Para 83 of IND AS 19. Impact of change in assumption is recognised in Profit & Loss in case of AS 15 valuations, whereas in Ind AS 19 valuations it is recognised though OCI (post-employment obligations) and P&L will not be affected.
Figure 1: Government of India G-Sec Yield Comparison
- Comparing 10 Year G-Sec yields between 31st Dec 2020 and 31st Dec 2019, we note that there is a decrease of 84 basis points in the last year.
- Comparing Short term (< 5 years) G-Sec yields between 31st Dec 2020 and 31st Dec 2019, there is a sharp 146 basis point reduction in the 5 year yield.
- Comparing Long term G-Sec yields between 31st Dec 2020 and 31st Dec 2019, we note that there is almost a 24 basis points decrease as the term approaches 25 years. Thus, there is a pattern of decreasing long term yields.
- The decrease in G – Sec yields will result in increase in the actuarial liability. Decrease in G – Sec yields will also result in Actuarial Losses in Defined Benefits Obligations due to discount rate impact. Offsetting this impact by changing other actuarial assumptions like salary growth rate should be done cautiously by considering relevant factors including long term costs and practical feasibility of controlling it from HR perspectives, and after discussion with actuary and company HR team and the management of the company.
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