Introduction:

The past 18 months have seen volatile Annualised Par Yields on Government Securities (G-Sec)/DiscountRates due to the pandemic lockdown. However, rates seem to have been more stable in the last few months at shorter- and medium-term durations, despite anticipations for a third wave of the pandemic.

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Comments & Insights:

• The G-sec rates have increased compared to last year as the economy and businesses have gained some momentum and are steadily converging to normalcy
• Rates as on 30-09-2021 for tenures ranging from 3 to 8 years have decreased by an average of 0.16% when compared to 31-03-2021Rates.
• For very short and very long tenures, increasing 30thSeptember 2021 G-sec rates when compared to 31stMarch 2021, would lead to an Actuarial Gain & for other tenures, the decreasing G-sec rates would lead to an Actuarial Loss due to change in Financial Assumptions, if all other Assumptions remain the same as 31st March2021 valuation.
• It is anticipated that the United States Federal Reserve is going to be increasing rates and thereby a similar affect could be seen on interest rates in India.

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

Accumulating Compensated Absences Actuarial Valuation considerations for 2021 - http://www.kapandit.com/assets/newsletter/Accumulating_Compensated_Absences_Actuarial_Valuation_Considerations_for_2021.pdf

Interest Rate Updates: -June 2021 - https://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-June-2021.pdf

March 2021 - https://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-March-2021.pdf

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

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