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Nov 14, 2017 12:15 PM IST | Source: Moneycontrol.com

Centre may issue first tranche of bank recapitalisation bonds in early December

The first tranche of Rs 1.35 lakh crore worth of bank recapitalisation bonds with a 10-year tenure and offering a coupon rate of around 7 percent would be issued by the Centre in the first week of December.

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The first tranche of the Rs 1.35 lakh-crore worth of bank recapitalisation bonds with a 10-year tenure, and a coupon rate of around 7 percent will be issued by the Centre in the first week of December, according to a report in the Business Standard.

The government is in discussion with the Reserve Bank of India, and other banks for the bond issue and the amount to be raised for the first tranche is yet to be fixed.

Officials aware of the development told the newspaper, that different tranches could have different maturity periods.

Finance Minister Arun Jaitley announced PSU banks recapitalisation plan of Rs 2.11 lakh crore on October 24, 2017. The issue is expected to be spread over two years to bolster banks' finances and revive the economy.

Around Rs 1.35 lakh crore will come from recapitalisation bonds and Rs 76,000 crore through budgetary support and market. The bonds will be frontloaded over the next three or four quarters.

As yet, it has not been decided which bank will get the money raised from the bonds.

The finance minister had said at that time Rs 18,000 crore will be paid out under the Indradhanush scheme and the banks will have to raise Rs 58,000 crore through share sales as a part of the Rs 76,000 crore infusion.

Analysts estimate that to comply with the Basel III norms which will start in March 2019, public sector banks need capital infusion of Rs 5 lakh crore.
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