Perpetual bonds have no maturity date, therefore they are usually treated as equity rather than debt and to comply with Basel III capital regulations, banks need to improve and strengthen their capital planning processes.
On the basis of private placement, a total of 18 allottees were issued the bonds, carrying a coupon rate of 8.50%. Earlier this month, the state-owned lender had informed the exchanges about raising Rs 764 crore by issuing Basel III compliant additional tier-1 bonds on private placement basis.
The Indian banking system has been implementing Basel III standards in phases since April 1, 2013 and the banks were expected to implement these norms by March 2020. These norms are being implemented to lessen the concerns surrounding potential stress on asset quality and consequential impact on performance and profitability of banks.
