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With reference to the Additional Tier-1 (AT1) bond, consider the following statements:
  1. It is an unsecured and perpetual tenor bond.
  2. It is only issued by the Reserve bank of India.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    2 Only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
With reference to the Additional Tier-1 (AT1) bond, consider the follo...
Recently, The Bombay High Court Friday quashed the write-off of Additional Tier-1 (AT1) bonds worth Rs 8,400 crore issued by Yes Bank Ltd, bringing relief to investors.
  • These bonds are unsecured bonds that have perpetual tenors, are issued by banks and have no maturity date.
  • They have a call option, which can be used by the banks to buy these bonds back from investors. These bonds are typically used by banks to bolster their core or tier-1 capital.
  • These AT1 bonds are subordinate to all other debt and only senior to common equity.
  • These bonds were introduced by the Basel accord after the global financial crisis to protect depositors.
Hence only statement 1 is correct.
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