Recapitalisation bonds: Govt fixes coupon rates up to 7.68% with six maturities
New Delhi: The government has fixed the coupon rate—up to 7.68%—for the Rs80,000 crore recapitalisation bonds to be given to 20 public sector banks during the current fiscal for meeting the regulatory capital requirement and growth needs. Bank recapitalisation bonds are being issued as part of the government’s Rs2.11 trillion bank recapitalisation plan.
Bonds will be issued with six different maturities and coupon rates for infusing capital in public sector banks, as per a gazette notification issued by the government on 29 January.
The recapitalisation bonds with maturity date on 29 January 2028 will have a coupon rate of 7.35%, while those maturing on 29 January 2029 will carry rate of 7.42% and that of 29 January, 2030, it will be 7.48%.
For paper with maturity date 29 January 2031, coupon rate has been fixed at 7.55%; for 29 January 2032, the interest rate 7.61% and the highest rate of 7.68% for 29 January, 2033 paper, it said.
The special securities will be issued at par for the amount as per the application made by the eligible banks, the notification said.
The date of issue of the special securities will be the date of receipt of subscription amount from the eligible banks, it added.
A total of Rs80,000 crore will be infused in public sector banks through recapitalisation bonds this year, said the gazette notification.
They will have to be held till maturity, and will not get the status of statutory liquidity ratio, or the minimum sovereign bonds that banks have to subscribe, it said, adding that they can be part of the “held to maturity category” of investments by public sector banks without any limits. Such securities can’t be traded, it added.
In the recently announced Reforms Agenda for Responsive & Responsible PSBs, the government committed Rs52,311 crore for the 12 banks under prompt corrective action (PCA) as against healthy banks, which will be Rs35,828 crore crore by 31 March 2018.
During the current fiscal, IDBI Bank has been committed the highest infusion of Rs10,610 crore, followed by Bank of India (Rs9,232 crore) and UCO Bank (Rs6,507 crore).
Among other PCA lenders Central Bank of India was committed Rs5,158 crore, Indian Overseas Bank Rs 4,694 crore; Oriental Bank of Commerce Rs3,571 crore; Dena Bank Rs3,045 crore; Bank of Maharashtra Rs3,173 crore; United Bank of India Rs2,634 crore; Corporation Bank Rs2,187 crore and Allahabad Bank Rs 1,500 crore by the end of 2017-18.
Following the revision of the PCA guidelines in April 2017, RBI first placed IDBI Bank under the watch. The series continued till earlier this month when it placed Allahabad Bank, the last in the series, under PCA. State Bank of India (SBI) will get Rs8,800 crore, Punjab National Bank Rs5,473 crore and Bank of Baroda Rs5,375 crore.