RBI eases reserve norms for banks' infra bond sales

MUMBAI Tue Jul 15, 2014 6:44pm IST

A worker cleans the stairs of the Reserve Bank of India (RBI) building in Kolkata December 18, 2013. REUTERS/Rupak De Chowdhuri/Files

A worker cleans the stairs of the Reserve Bank of India (RBI) building in Kolkata December 18, 2013.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

MUMBAI (Reuters) - The Reserve Bank of India said on Tuesday it will allow long-term bonds raised by banks for infrastructure lending to be exempted from mandatory reserve requirements, in line with the government's announcement in the budget last week.

The bonds issued by banks, to be aimed at the infrastructure sector including affordable housing, will be required to have a minimum tenure of seven years.

The bonds would need to be "plain vanilla", without a call or put option, and can be issued with a fixed or floating rate of interest, the RBI said. Bond sales can be done through public issuance or private placement, the central bank added.

Bonds raised by banks that qualify for reserve exemptions cannot be sold to other lenders.

Bonds raised with these conditions would be exempt from the statutory liquidity ratio or cash reserve requirements. They will also be exempt from priority sector lending targets.

Under current rules, banks must keep a portion of bonds sold with the RBI as reserves.

RBI's operational details come after Finance Minister Arun Jaitley unveiled a proposal to exempt bonds for infrastructure lending from reserve requirements last week at the government's maiden budget. For a detailed press release, please see: [bit.ly/1tMk6PE]

(Reporting by Neha Dasgupta; Editing by Anupama Dwivedi)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Sino-Indian Ties

REUTERS SHOWCASE

Monetary Policy

Monetary Policy

Fed renews zero rate pledge, but hints at steeper rate hike path.  Full Article 

Eyeing Stocks

Eyeing Stocks

Interview - EPFO chief urges green light to buy stocks  Full Article 

Stimulus Reports

Stimulus Reports

China cenbank injects $81 bln into major banks to support economy - reports  Full Article 

Ranbaxy Investigation

Ranbaxy Investigation

Ranbaxy says U.S. authorities seek information on pricing data.  Full Article 

E-Commerce

E-Commerce

Tiger Global leads $60 million investment in Quikr.  Full Article 

Monsoon Update

Monsoon Update

Delayed retreat of monsoon rains to start this weekend  Full Article 

Financing Deal

Financing Deal

IndiGo agrees $2.6 billion aircraft finance deal with China's ICBC  Full Article 

Grim Outlook

Grim Outlook

Sony deepens loss estimate on struggling smartphone business  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage