CURRENT AFFAIRS

Detailed explanation-1: -“The capital of ₹880 crore raised through the AT1 bonds will support the business growth of the bank.

Detailed explanation-2: -AT1 bonds are unsecured bonds that have perpetual tenor. In other words, these bonds, issued by banks, have no maturity date. They have a call option, which can be used by the banks to buy these bonds back from investors. These bonds are typically used by banks to bolster their core or tier-1 capital.

Detailed explanation-3: -What are the Tier 1 and Tier 2 bonds? Tier 1 capital is the primary funding source of the bank. Tier 1 capital consists of shareholders’ equity and retained earnings. Tier 2 capital includes revaluation reserves, hybrid capital instruments and subordinated term debt, general loan-loss reserves, and undisclosed reserve.

Detailed explanation-4: -In India, tier 2 capital consists of reserves and hybrid securities. Reserves are capital provisions that a bank makes. Hybrid securities carry features of both debt and equity instruments and may further be classified into upper (perpetual instruments) and lower capital (dated instruments).