New Delhi, Oct. 20 -- Rising government bond yields pose a potential mark-to-market (MTM) provisioning risk for Canara Bank, even as the lender expects strong festive-season demand for housing and vehicle loans, managing director and chief executive officer Brajesh Kumar Singh told Mint.

The bank will assess the impact based on market conditions over the next six months, he said. Higher bond yields push down the market value of existing fixed-rate bonds, potentially requiring banks to recognise losses on investment portfolios and make additional provisions, depending on how the investments are classified and accounted for.

The yield on the 10-year government bond has risen from around 6.75% in June to approximately 7.38%, amid elevated ...