@Byjus Ias- Why does lending rates of banks determined by long-term G-secs yield rates? How can long term yeild rates result in lower coupon rate on long term G secs?
You are my go-to favorite for learning economic concepts. It has been a great journey learning from you so far. Thank you Shyam Sir. #jaiupsc 😜 #byju's 💪
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Since yield rate is less banks will be more interested to earn through bank loans rather than the bonds. Hence it attract the loan borrowers by decreasing the interest rates. Hope i am right!! Let me know if there is some differing point.
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A Detailed yet concise explanation , Thank You so much Sir For Those who want a condensed explanation :- Operation Twist - An Open Market Operation conducted by RBI by simultaneously selling short term G-securities ( government securities ) & buying Long Term G-Securities . Buying Long Term G-Sec reduce the interest rate of long term loans such as Housing , Vehicle & Industrial loans - this would help with the economic growth . Selling Short Term G-Sec provides RBI the liquidity to meet the expenditure . Thus it will satisfy 2 requirements simultaneously .
oh i think you hv well understood then plz explain me: RBI selling short term G-Sec-> increases short term interest rates. But earlier we were reducing the Repo so as to reduce the short term Interest rates (Repo is a short term agreement). So, what is the benefit? ( -are we countering our earlier decision?- )
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Your second last line is incorrect. it will not affect liquidity with RBI because it is simultaneously selling and purchasing for the same amount. Moreover RBI does not require liquidity for meeting any expenditure, it is the government who does.
@@bobminion3438 you are confusing between yeild rate and interest rate. Increasing short term yield rate will not effect short term lending rates of banks, since lending rates are based on long term bond yield rates.
@@Aditya-tp2fu gupta i hav one doubt. In video sir said Long term YR will determine Long term loans interest rate provided by banks. does this LT YR will affect short term loans interest rate?? if not by LT YR which will affect short term loans?? either repo or nothing?
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If banks are earning more from long term G-sec then they would prefer to invest their money in G-sec. Since banks are already getting a good return on G-sec, loan interest rates would increase in the long term.
Thank you sir for breaking down this concept in a lucid manner. I guess one not only learns about Operation Twist but many other concepts in Economics such as OMO, coupon and yield rate, relationship between yield rate and market rate or price of bonds based on demand and supply, types of g secs etc all of which are a part of this whole Operation Twist.
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Sir, why can't they just repurchase long term G-sec and create the demand so as to decrease the yield rate rather than repurchase long term G-sec and selling short term G-sec? Why do they want to sell short term G-sec? Is it to generate the money for purchasing long term G-sec?
That would lead to increase in money supply which will increase the demand. Now, when the bank lends for long-term to industries, etc, it increases supply in the market and boosts economy.
Explained very well sir... please start a series im economics from basic to advance ..as i am a banker ...pl make a video on how many forms or ways of capital that is infused by govt to banks..
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Sir is intellectually as sound as earlier but his works on fitness is visible... Keep it up sir.... Byju team is temple of knowledge And u all sirs are Our God... Love u all sir
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I am not preparing for IAS.. but this was a very helpful video.. I was trying to understand what a yield rate is, but never did.. this made so much more sense and now I understand what operation twist is. Thank you!!
Sir, how would the demand increase for a long term G Sec when it is only RBI that is purchasing it from the market and there is no other player. Why would the market price of that G- Sec increase?
As RBI starts purchasing the long term G Sec their availability decreases thus increasing their market price (Lower supply - Higher Demand) this leads to reduction in their yield rates.
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Thank you for the wonderful explanation sir but, as you mentioned that the banks started investing in the long term g-sec's as there was a huge difference in repo rate and yield rate without passing the benefit to citizens, doesn't it automatically increase the demand for long term sec's in the market? Will the market value not increase when the banks are collectively investing even when the RBI is not purchasing them?
Bro that's the importance of the word simultaneous. Earlier the banks would invest in long term bonds because the yield was higher for that. And they would lend for short term loans because there the yield was lesser.(lesser yield means that there is no point in investing). Now with this operation, simultaneously the yield for long term bonds decreased and that for short term bonds increased! Now banks will automatically reverse their earlier business. They will invest in short term bonds and will lend in long term loans. The point is that the banks have to lend anyways to sustain their business. So now it is cheaper for them to lend in long term loans. At the same time it's lucrative to invest in short term bonds. I hope u got it already.
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Dear Aspirant, Kindly click the link: byjus.com/free-ias-prep/economy-this-week/ *Share the video with fellow IAS Aspirants and subscribe to our channel. Press the bell icon to never miss another update.*
"Weekly economy" are missing these days.
very nicely explained. Thank You sir and thank you Byju's for publishing it. One thing missed was how yield rate and interest rates are proportional?
I think, When yield rate of the bonds or Gsecs increases , the banks would increase their lending rates to keep them competitive with the Gsecs.
@@pratiknandan862 Why is it necessary to keep interest rate competitive with yield?
Wowww. Exquisitely explained. Comprehended that actual hidden crux like a butter.
Theivamey.... Neenga nalarkanum🙏
what is the name of the teacher please? i've become a fan of him. want to see other videos as well.
Sir pls continue economy this week series
@Byjus Ias- Why does lending rates of banks determined by long-term G-secs yield rates? How can long term yeild rates result in lower coupon rate on long term G secs?
Same problem bro .Did u got the answer?
how are lending rates dependent on yield rates
You are my go-to favorite for learning economic concepts. It has been a great journey learning from you so far. Thank you Shyam Sir.
#jaiupsc 😜 #byju's 💪
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You missed the main point- how reduction in yield rate of long term securities will decrease interest rates
How..??
Bikramjit Singh if u know pls explain
Banks can invest in these G-secs which are guaranteed by the RBI instead of giving loans to earn money
@@PranavKadamares If they want to earn money then why will they invest in Bonds.
Since yield rate is less banks will be more interested to earn through bank loans rather than the bonds. Hence it attract the loan borrowers by decreasing the interest rates. Hope i am right!! Let me know if there is some differing point.
A Crystal clear explanation and a thorough understanding...
Thank you sir..
Keep making complex things so simple.
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A Detailed yet concise explanation , Thank You so much Sir
For Those who want a condensed explanation :-
Operation Twist - An Open Market Operation conducted by RBI by simultaneously selling short term G-securities ( government securities ) & buying Long Term G-Securities . Buying Long Term G-Sec reduce the interest rate of long term loans such as Housing , Vehicle & Industrial loans - this would help with the economic growth . Selling Short Term G-Sec provides RBI the liquidity to meet the expenditure . Thus it will satisfy 2 requirements simultaneously .
oh i think you hv well understood then plz explain me: RBI selling short term G-Sec-> increases short term interest rates. But earlier we were reducing the Repo so as to reduce the short term Interest rates (Repo is a short term agreement). So, what is the benefit? ( -are we countering our earlier decision?- )
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Your second last line is incorrect. it will not affect liquidity with RBI because it is simultaneously selling and purchasing for the same amount. Moreover RBI does not require liquidity for meeting any expenditure, it is the government who does.
@@bobminion3438 you are confusing between yeild rate and interest rate. Increasing short term yield rate will not effect short term lending rates of banks, since lending rates are based on long term bond yield rates.
@@Aditya-tp2fu gupta i hav one doubt. In video sir said Long term YR will determine Long term loans interest rate provided by banks. does this LT YR will affect short term loans interest rate?? if not by LT YR which will affect short term loans?? either repo or nothing?
I FOUND ONE EXPRESSION FROM BYJUS ANALYSTS.
EVERY ONE HAS SAME EXPRESSION TO BE PARTICIPATED. FACE EXPRESSION AND ANALYSIS IS SAME. THANK YOU SIR.
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Something special in Byju's teachers. Make me feel comfortable, seems like studying from many years.
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Please use the white background..in black board ..with red marker is invisible
Crystal clear concept....very wonderful video sir🙏🙏
👍👍Weekly economics???
thank you so much sir for this wonderful explained lecture.
Such a good explanation than you byjus and shyam sir
Still some confusion.
How long term G-secs are connected with interest rate?
Because of demand and supply......if supply increases then automatically interest rate will come down
If banks are earning more from long term G-sec then they would prefer to invest their money in G-sec. Since banks are already getting a good return on G-sec, loan interest rates would increase in the long term.
Same problem bro.Did u got the answer?
Pls use white background.
Omg, we got you back, thank you sir 🙏
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Please if possible use white background.
sir please please continue weekly economy
Hi sir please explain yield rate and coupen rate in tamil
How does the interest rate change?
Sir weekly economic video upload please
Was waiting for your explanation... thank you sir!have a grt day....
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Very Good Exaplanation...
Sur weekly economy lectures provide kijie...
Sir please upload weekly economy video😊
Thank you sir for breaking down this concept in a lucid manner. I guess one not only learns about Operation Twist but many other concepts in Economics such as OMO, coupon and yield rate, relationship between yield rate and market rate or price of bonds based on demand and supply, types of g secs etc all of which are a part of this whole Operation Twist.
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Sir, why can't they just repurchase long term G-sec and create the demand so as to decrease the yield rate rather than repurchase long term G-sec and selling short term G-sec? Why do they want to sell short term G-sec? Is it to generate the money for purchasing long term G-sec?
That would lead to increase in money supply which will increase the demand. Now, when the bank lends for long-term to industries, etc, it increases supply in the market and boosts economy.
watched so many videos but sir you explained it so well thank you!
Why don't you use the White board sir...?
first he told the yield rates should be higher then he told the resultant of OT is reduction of yield rate on long term bonds, confusing?
Explained very well sir... please start a series im economics from basic to advance ..as i am a banker ...pl make a video on how many forms or ways of capital that is infused by govt to banks..
Thank you sir...
I m the first one.
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Best explained
thank you sir
U r God of economy
Banger video
Superb, thank you very much Shyam sir.
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The video is so good, very simple language is used to explain everything
Amazing explanation sir! Thanks a lot
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Great effort
Best best best
Please don't write with red on black...please use white pen
Thanks sir for explaining mellifluously
Loved it .
Please continue with the weekly discussion.
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Sir is intellectually as sound as earlier but his works on fitness is visible...
Keep it up sir....
Byju team is temple of knowledge
And u all sirs are Our God...
Love u all sir
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NO words . Thnak you Byjus IAS team
amazing explanation - thank you so much!
I am not preparing for IAS.. but this was a very helpful video.. I was trying to understand what a yield rate is, but never did.. this made so much more sense and now I understand what operation twist is. Thank you!!
Sir,Please use white background.
👍
Thank you sir for easy explanation of economic concepts
Sir, how would the demand increase for a long term G Sec when it is only RBI that is purchasing it from the market and there is no other player. Why would the market price of that G- Sec increase?
As RBI starts purchasing the long term G Sec their availability decreases thus increasing their market price (Lower supply - Higher Demand) this leads to reduction in their yield rates.
Thanks. Very well explained.
excellent explanation. thank you sir
wow sir, how wonderfully you explained this.amazing
thank you, sir, for the concept clarity
Shyam sir like chamtkari baba who can do any magic ......
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Thank you so much sir ✨ ✨ U are always great
Plz use white marker Nd bold too
Cristal clear explanation....😍
TQ sir...
And also thanks for Byjus
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Weekly economics are helpful please be regular.
Crystal clear concept
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Thank you For Explaining concepts in easier ways.. Good Job Byju's, Keep it up
Tq sir but it would be better if you use white colour instead of red on that black board..
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TQ very much sir....
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Thank you sir🙏
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ruclips.net/channel/UC1pfsmDBnMQB8sOuQvmTvRQ
Amazing explanation!
very tough concept i have ever seen
Thank you sir
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Thank you so much sir👌
Thank you for the wonderful explanation sir but, as you mentioned that the banks started investing in the long term g-sec's as there was a huge difference in repo rate and yield rate without passing the benefit to citizens, doesn't it automatically increase the demand for long term sec's in the market? Will the market value not increase when the banks are collectively investing even when the RBI is not purchasing them?
Bro that's the importance of the word simultaneous. Earlier the banks would invest in long term bonds because the yield was higher for that. And they would lend for short term loans because there the yield was lesser.(lesser yield means that there is no point in investing).
Now with this operation, simultaneously the yield for long term bonds decreased and that for short term bonds increased! Now banks will automatically reverse their earlier business. They will invest in short term bonds and will lend in long term loans. The point is that the banks have to lend anyways to sustain their business. So now it is cheaper for them to lend in long term loans. At the same time it's lucrative to invest in short term bonds.
I hope u got it already.
thank you sir, this was excellent
I am 1st to watch this video.
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Mindblowing illustration of the topic
Thank you sir
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Sir i was waiting for this video and your explaination too....thank u byjus
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Such videos prove to be very helpful for students and aspirants, rather everybody out there; thank you so much for the explanation sir.
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best explanation.. even the guv couldn't explain it so smoothly
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Thank you so much sir 🤗🤗🤗🤗🤗
You explained very well😀😀
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Well explained.... Thanks a lot
🧡
Sir how can be coupon rate will come down as it nominal rate.
And by selling short term security how can they borrow heavily
Excellent sir..!
Crystal clear explanation sir
Thank you so much sir
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Kindly continue economy this week please
Thank you sir.
very informative.thank you for the class sir.
can you please give subtitles for the videos,this will be more halpful for students like me
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Thanks a lot sir, very beautifully explained!
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Thanks sir plz bring economic weekly class
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Very informative thank you so much for the Class sir
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Thanks alot sir ...please continue
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Lucid , simplified & fluent
Thanks a lot
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👌👌👌👌👌 Shyam sir
Great explanation sir 💞
Thanks BYJU'S
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Please upload weekly economics sir
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