UPSC Exam  >  UPSC Questions  >  Consider the following statements with refere... Start Learning for Free
Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :
1. They are unsecured bonds with no predetermined maturity date and form part of a lender's core capital, known as tier-1 capital.
2. They will serve as shock absorbers when banks start to fail.
3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.
Which of the statements given above is/are correct ?
  • a)
    1 and 2 only
  • b)
    2 only
  • c)
    1 and 3 only
  • d)
    1, 2 and 3
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Consider the following statements with reference to the Additional Tie...
Additional tier-1 bonds are unsecured bonds with no predetermined maturity date. It forms part of a lender's core capital or commonly known as tier-1 capital. AT-1 bonds are unsecured, perpetual, high- risk bonds that banks issue to shore up their core capital base to meet the Basel III norms. Banks can skip paying interest on these bonds if their capital ratios fall below a certain threshold level. So, Statement 1 is correct.
The AT1 bonds, designed to act as a shock absorber when banks fail, impose permanent losses on bondholders or are converted into equity if a bank's capital ratios fall below a predetermined level. The conversion of AT1 bonds into equity is a way to provide additional capital to the bank, which can help it continue to operate and maintain financial stability. However, this also means that bondholders may suffer losses if the value of the equity into which their bonds are converted is less than the value of their original investment. So, Statement 2 is correct.
AT-1 bonds are regulated by RBI. AT1 bonds can be from domestic as well as foreign market. Banks with foreign business / presence, may have a part of their AT-1 capitalisation from foreign market. Banks with foreign business or a presence in multiple countries may issue AT1 bonds in various currencies and markets to diversify their sources of capital and reduce funding costs. So, Statement 3 is not correct.
This question is part of UPSC exam. View all UPSC courses
Explore Courses for UPSC exam

Similar UPSC Doubts

Top Courses for UPSC

Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?
Question Description
Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?.
Solutions for Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Consider the following statements with reference to the Additional Tier I bonds – AT1 bonds :1. They are unsecured bonds with no predetermined maturity date and form part of a lenders core capital, known as tier-1 capital.2. They will serve as shock absorbers when banks start to fail.3. They are equity instruments bought from domestic and foreign markets and regulated by SEBI in India.Which of the statements given above is/are correct ?a)1 and 2 onlyb)2 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice UPSC tests.
Explore Courses for UPSC exam

Top Courses for UPSC

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev