India to face key test for risky bank bond as Sebi lowers investment cap

The Securities & Exchange Board of India this month announced rules which restrict mutual funds' holdings of perpetual Additional Tier 1 and Tier 2 notes to 5% of net assets for a single issuer

India is set to face its first test of demand for a riskier type of bank bond since the regulator introduced a cap on mutual funds’ investments in such securities.

One of the nation’s largest regional lenders, Bank of Maharashtra, is seeking bids Monday for rupee-denominated Tier 2 notes in a sale that will be closely watched to gauge demand from mutual funds, the biggest buyer of such debt.

The Securities & Exchange Board of India this month announced rules which restrict mutual funds’ holdings of perpetual Additional Tier 1 and Tier 2 notes to 5% of net assets for