On Tuesday, the finance ministry announced a Rs2.11 trillion PSU bank recapitalisation plan, Rs1.35 trillion of which will be infused through recapitalisation bonds. Bond yields rose on fears that recapitalisation bonds will add to the over-supply of government securities in the market. On Tuesday, the finance ministry announced a Rs2.11 trillion PSU bank recapitalisation plan, of which Rs1.35 trillion will be infused through recapitalisation bonds. The first method was used in 1990s when recapitalisation bonds were issued. According to Reserve Bank of India governor Urjit Patel, except for the interest expense, recapitalisation bonds will be liquidity neutral.

Source: Mint October 25, 2017 16:07 UTC