P&SB recapitalisation: Centre issues Rs 5,500 cr worth of zero-coupon bonds

P&SB to park investment in HTM category; raises concern

The Centre, in a first move of its kind, has issued Rs 5,500 crore in zero-coupon bonds for recapitalising Punjab and Sind Bank (P&SB) and allowed it to park the paper in its held-to-maturity (HTM) category at face value rather than the discounted market rate.

Zero-coupon bonds do not bear any interest and are traded at a discount to the face value.

The move is seen as raising concern in the accounting fraternity and bank auditors though the banking regulator, the Reserve Bank of India (RBI), has cleared it for now after much internal deliberation.

According to the government’s gazette notification, five non-interest-bearing