Sign In
Learn bits
Economy
Admin

28/12/20 09:00 AM IST

Zero coupon bonds

In news

The government has used financial innovation to recapitalise Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest bearing bonds valued at par. 

What kind of bonds are these?
  • These are “non-interest bearing, non-transferable special GOI securities” have a maturity of 10-15 years and issued specifically to Punjab & Sind Bank.
  • “These recapitalisation bonds are special types of bonds issued by the Central government specifically to a particular institution.
  • Only those banks, whosoever is specified, can invest in them, nobody else. It is not tradable, it is not transferable.
  • It is limited only to a specific bank, and it is for a specified period it is held at the held-to-maturity (HTM) category of the bank as per the RBI guidelines. 
Different from traditional zero coupon bond
  • Zero coupon bonds by private companies are normally issued at discount, but since these special bonds are not tradable these can be issued at par.
  • “There is a difference between zero coupon bonds issued by other corporates and these.
  • Normally zero coupon bonds are issued at a discount, which are tradable also.
  • Here, there is no question of trading and these are special types of bonds, which the government issues specifically to a specified person and it’s issued at par.
Source : Indian Express

More Related Current Affairs View All

12 Nov

Population decline

' The Chief Ministers of both Andhra Pradesh and Tamil Nadu expressed concerns about the low fertility rates in their States recently.' Andhra Pradesh Chief Minister N. Chandrab

Read More

12 Nov

COP 29

'As the COP29 summit begins in Baku, Azerbaijan, terms such as New Collective Quantified Goal (NCQG), the Paris Agreement, Kyoto Protocol, loss and damage, and Nationally Determine

Read More

12 Nov

Lignosat, the first wooden satellite launched into space

'The world's first wooden satellite LignoSat built by Japanese researchers was launched into space in an early test of using timber in lunar and Mars exploration.' LignoSat&rd

Read More

India’s First Ai-Driven Magazine Generator

Generate Your Custom Current Affairs Magazine using our AI in just 3 steps