Primary dealers asked to discontinue Tier-III bonds

The Reserve Bank of India (RBI) on Wednesday said it has decided to phase out short term subordinated debt as an eligible source of capital for standalone Primary Dealers (PDs). Hence, PDs may not issue Tier-III bonds from July 1, 2012. As per earlier guidelines, PDs were allowed to raise capital through issuance of short term subordinated debt to meet capital charge for market risk.