Govt fixes rates up to 7.68 pc for recap bonds with 6 maturities

New Delhi: The government has fixed the coupon rate - up to 7.68 per cent - for the Rs 80,000 crore recapitalisation bonds to be given to 20 public sector banks during the current fiscal for meeting the regulatory capital requirement and growth needs.

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 January 29.

The bonds with maturity date on January 29, 2028 will have a coupon rate of 7.35 per cent, while those maturing on January 29, 2029 will carry rate of 7.42 per cent and that of January 29, 2030, it will be 7.48 per cent.

For paper with maturity date January 29, 2031, coupon rate has been fixed at 7.55 per cent; January 29, 2032 the interest rate 7.61 per cent and the highest rate of 7.68 per cent for January 29, 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 Rs 80,000 crore will be infused in state-owned banks through the 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 and Responsible PSBs, the government committed Rs 52,311 crore for the 12 banks under prompt corrective action (PCA) as against healthy banks, which will be Rs 35,828 crore crore by March 31, 2018.

During the current fiscal, IDBI Bank has been committed the highest infusion of Rs 10,610 crore, followed by Bank of India (Rs 9,232 crore) and UCO Bank (Rs 6,507 crore).

Among other PCA lenders Central Bank of India was committed Rs 5,158 crore, Indian Overseas Bank - Rs 4,694 crore; Oriental Bank of Commerce Rs 3,571 crore; Dena Bank - Rs 3,045 crore; Bank of Maharashtra - Rs 3,173 crore; United Bank of India - Rs 2,634 crore; Corporation Bank Rs 2,187 crore and Allahabad Bank - Rs 1,500 crore by the end of 2017- 18.

Following the revision of the PCA guidelines in April 2017, the 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 Rs 8,800 crore, Punjab National Bank Rs 5,473 crore and Bank of Baroda Rs 5,375 crore.