Finance Ministry Mulls Over Zero Coupon Bonds for Recapitalization
To act on the announced Rs. 2.11 lakh crore infusion into the public sector banks, the finance ministry is thinking about issuing zero coupon bonds.
There are various options to pump in the capital and help the banks meet the global capital adequacy norms for Basel III, and zero coupon bonds are one of them, an official said. He said that the final decision will be taken by the end of the month.
Zero coupon bonds are debt instruments that are released at a discounted or lower price but can be redeemed at face value after a specified term has ended. For instance, a bond with a Rs 200 face value can be issued at Rs 160 for three years. So, after three years, the bondholder gets Rs 200.