The Hindu Business Line : Recap bonds converted into G-Secs

Mumbai, Aug. 3 The Government of India has announced the conversion of nationalised banks recapitalisation bonds into government securities, a news release from the RBI said.

The Government announced the issue of “8.08 per cent Government Stock 2022” for an aggregate amount of Rs 2,969.411 crore (nominal), “8.26 per cent Government Stock 2027” for an aggregate amount of Rs 1,427.329 crore (nominal) and “8.32 per cent Government Stock 2032” for an aggregate amount of Rs 2,434.050 crore (nominal) to eleven nationalised banks on Thursday.

According to a dealer with a private bank, the recapitalisation bonds were provided to some nationalised banks in order to enable them to meet their capital adequacy ratio. Now that most of them are doing well, this quasi-equity is being converted into quasi-debt by converting the bonds into government securities.

The Government Stocks are issued in lieu of the outstanding amount of “10 per cent Nationalised Banks’ (non-transferable) Special Security, 2007” aggregating Rs 473.330 crore, “10 per cent Nationalised Banks’ (non-transferable) Special Security, 2008” aggregating Rs 850 crore, “10 per cent Nationalised Banks’ (non-transferable) Special Security, 2009” aggregating Rs 1,385.329 crore, “10 per cent Nationalised Banks’ (non-transferable) Special Security, 2010” aggregating Rs 2,422.131 crore, “10 per cent Nationalised Banks’ (non-transferable) Special Security 2011” aggregating Rs 400 crore and “8.5 per cent Nationalised Banks’ (non-transferable) Special Security, 2014” aggregating Rs 1,300 crore. The Government Stocks are issued at par, said a press release from the Reserve Bank of India.

The Government Stocks will be transferable and eligible for ready forward transactions (repo) and will be reckoned as an eligible investment for the purpose of Statutory Liquidity Ratio, said the release.

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