With public sector banks (PSBs) recalling their additional tier-I (AT1) bonds, some of the lenders may not be able to meet the Tier-I regulatory requirements as on March 31, 2018, rating agency ICRA said on Tuesday.
Bank of Maharashtra and Oriental Bank of Commerce have issued notice to their AT1 bond holders about an exercise of early call option on their AT-I bonds. As on December 31, 2017, the PSBs had AT-1 bonds outstanding of ₹60,385 crore. ICRA said out of the banks currently under the prompt corrective action (PCA) framework or are likely to come under PCA, 60% of AT-I bonds totalling ₹37,600 crore can be prematurely recalled.
“With a capital infusion of ₹80,562 crore during Q4 FY 2018, the effective recapitalisation will stand reduced for many PSBs,” it said.
