RBI to examine buyback of outstanding amount of Rs 84,574 cr in AT-1 bonds

Could disallow retail investments directly and through MFs in the instrument

The Reserve Bank of India (RBI) would examine the buyback of the outstanding amount of Rs 84,574 crore in additional tier-1 (AT-1) bonds issued by banks at par, and a ban on retail investments in them, directly and through mutual funds.
 

These measures include the deletion of the clause which permits banks to service the coupon payable on these AT-1 bonds drawn from their reserves, and the ratings assigned to them. In terms of the current regulatory treatment, these are in the nature of perpetual non-cumulative preference shares (PNCPS), but rating agencies have always treated them as “straight debt”.

“These