Other public sector banks such as Bank of India, Union Bank of India and Dena Bank plan to play it safe and not to push the entire investment portfolio into the current category taking advantage of lower YTM this year. "If we mark-to-market 100 per cent of the portfolio and the YTM goes up next year, it will boomerang as we will be forced to provide for a huge sum," one banker said. Going by the Reserve Bank of India stipulation, banks are required to mark-to-market 60 per cent of their securities portfolio in March 1999 and 70 per cent in March 1999.

The SBI will be the largest gainer on account of YTM. Even after going for 100 per cent mark-to-market, it may have a surplus of about Rs 600 crore. For Bank of Baroda, the amount will be about Rs 200crore. Dena Bank, which will not mark-to-market 100 per cent of the securities portfolio, will gain Rs 60 crore, while Corporation Bank will have a surplus of about Rs 25 crore. Canara Bank will gain about Rs 80 crore, chairman TR Sridharan said. "We are closely looking into it. We may mark-to-market between 75 per cent and 100 per cent of the portfolio," SBI's chief financial officer Parag Bhattacharya told The Financial Express. Bhattacharya refused to divulge the exact amount saying "it will be substantial."

Corporation Bank and Oriental Bank of Commerce will now mark-to-market their entire portfolio from last year's level of 83 per cent and 80 per cent respectively.

Dena Bank will mark-to-market 85 per cent of its portfolio out of the gains made from the write-back of provisions. Earlier, based on the available market quotations as on March 31, 1998, the bank was able to mark-to-market 78 per cent of its portfolio. The gain as a result of the YTM announced on Monday is estimated at around Rs 60crore. Bank of India is yet to calculate the gain accrued by way of write-back of earlier depreciation provisions. But the bank may not go for 100 per cent mark-to-market even if the amount written back exceeds the provision required for marking to market the entire portfolio, an official said.

Union Bank of India may increase its mark-to-market portion from last year's 65 per cent to 80 per cent this year. Private sector and foreign banks stand to benefit the least on account of lower YTM. Sources at IndusInd Bank Bank said that the bank would gain about Rs 10 crore.

"We will record a marginal gain," a treasury official at TimesBank said. HDFC Bank's head of credit and market risk Paresh Sukthankar said that there would be no impact on his bank's balance sheet. IDBI Bank, which has not made any investment in the 10-year paper, would also stand to gain marginally. Sources at Global Trust Bank said that the bank is expected to gain marginally from the RBI's indicative YTM.

Among the foreign banks, theyear-end YTM quotations of the Reserve Bank did not come as a surprise. While BankAm, ABN Amro Bank, Stanchart, HongkongBank and Deutsche Bank are all expected to gain, the realisations will not be great, treasury sources said. As Stanchart's chief dealer-money markets Sanjay Bhasin pointed out: "Most foreign banks, including Stanchart, mark-to-market their investment portfolios on a daily basis. Gains and losses, if any, have already been factored." Foreign bankers explained that unlike state-run banks which do not trade much and hold a large chunk of longer-dated stock even in their current categories, their portfolio profile mostly included shorter maturity paper. Sources said that most of the foreign banks had got out of their longer dated stock around late December and early January this year.