Page 50 - Banking Finance November 2025

ARTICLE

market price is equal to its face value. This usually occurs agencies like CRISIL or ICRA will trade at higher prices,
when the coupon rate is equal to the current market reflecting lower default risk.
interest rate. 3. Inflation: Higher inflation expectations reduce the

At Premium: A bond trades at a premium when its purchasing power of future cash flows, leading to lower
market price is higher than its face value. This occurs bond prices.
when the coupon rate is higher than the current market
4. Economic Conditions: During economic downturns,
interest rate.
investors prefer safer investments like government
Example: A bond with a face value of Rs. 1,00,000 and bonds, driving up their prices and lowering yields.
a coupon rate of 8% will trade at a premium if current 5. Liquidity: Bonds that are easier to buy and sell will
interest rates are 6%, as investors will pay more for the typically have higher prices due to their liquidity.
higher coupon payments.
6. Supply and Demand: An increase in the supply of bonds
At Discount: A bond trades at a discount when its
or a decrease in demand can lower prices, while a
market price is lower than its face value. This happens
decrease in supply or an increase in demand can raise
when the coupon rate is lower.
prices.
Example: If the coupon rate is 5% but current market
rates are 7%, the bond will trade at a discount because The bond market in India offers a diverse range of
investors can find better returns elsewhere. investment opportunities, from government securities to
corporate bonds, each with its own set of characteristics and
Factors Affecting Bond Prices risks. Understanding the different types of bonds, their
Several factors influence bond prices in the market: valuation, and the factors influencing their prices is crucial
1. Interest Rates: The most significant factor affecting for making informed investment decisions. As the Indian
bond prices is the prevailing interest rates. When bond market continues to evolve, investors must stay
interest rates rise, bond prices fall, and vice versa. informed about market trends and economic conditions to
2. Credit Ratings: Bonds with higher credit ratings from optimize their returns.

Smart Online Course launches AI & Emerging Technologies in

Banking certification for professionals

Smart Online Course, India’s leading CPD-accredited e-learning platform for BFSI professionals, has launched
a new online certification titled “AI & Emerging Technologies in Banking – From Automation to Transfor-
mation.” This cutting-edge course is designed to equip banking and financial services professionals with
practical insights into the evolving role of AI, analytics, and digital platforms in the modern banking eco-
system.
The course covers a wide array of contemporary topics such as Robotic Process Automation (RPA), predic-
tive analytics, AI-powered personalization, decision intelligence, embedded finance, digital lending plat-
forms, cyber risk mitigation using AI, cloud-native banking, data privacy frameworks, and regulatory tech-
nologies. Learners will also explore real-world use cases, sectoral innovations, and best practices from
Indian and global BFSI institutions.
Developed in collaboration with the Risk Management Association of India (RMAI), the course offers a
certificate jointly endorsed by Smart Online Course and BFSI Sector Skill Council of India. With self-paced
video lectures, case-based MCQs, and downloadable resources, it caters to working professionals, students,
and fintech aspirants looking to future-proof their careers in digital banking and risk.
The course is now live at: www.smartonlinecourse.co.in

BANKING FINANCE | NOVEMBER | 2025 | 45