Introduction:

The past year has seen volatile Annualised Par Yields on Government Securities (G-Sec)/Discount Ratesdue to the pandemic lockdown and now rates seem to have stabilised a little nearer to one year ago.

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Comments & Insights:

• The G-sec rates have increased significantly due to the start of economic activity and return of normalcy due to unlocking compared to previous three quarters.
• Rates as on 31-03-2021 for shorter tenures are still lower when compared to 31-03-2020 Rates. However, there has been an improvement for when compared to rates as on 31-12-2020.
• Rates for longer tenures seem less volatile and have shown steady increase since Unlock 3.0 on account of the kick-starting of various economic activities.
• For shorter tenures, decreasing G-sec rates when compared to31-03-2020, would lead to an Actuarial Loss due to change in Financial Assumptions, if all other Assumptions remain the same as last year

Some Important Links:

Indian Accounting Standard 19 - https://indasaccess.icai.org/download/2019/asb0719/272/272asb-cias-2019-20-vol2-24.pdf

Accounting Standard 15 (R) - https://www.mca.gov.in/Ministry/notification/pdf/AS_15.pdf

Guidance issued by AASB amid Covid-19 - http://www.ka-pandit.com/assets/newsletter/A-Synopsis-of-the-GuidanceIssued-by-Auditing-and-Assurance-Standards-Board-amid-Covid-19.pdf

Interest Rate Updates: -

December 2020 - https://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-December-2020.pdf

September 2020 - https://www.ka-pandit.com/assets/newsletter/Interest_Rates_Updates_September_2020.pdf

June 2020 - http://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-June-2020.pdf

March 2020 - http://www.ka-pandit.com/assets/newsletter/KAP_Update_Volatility_in_the_Interest_Rate-March_2020.pdf

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