The Reserve Bank of India has asked banks to issue bonds to retail investors so as to deepen the corporate debt market.
“With a view to deepening the corporate bond market in India through enhanced retail participation, banks, while issuing subordinated debt for raising Tier II capital, are encouraged to consider the option of raising such funds through public issue to retail investors,” the RBI said in a notification.
Further, it said that while doing so banks are advised to adhere to the prescribed conditions so as to keep the investors aware of the risk characteristics of regulatory capital instruments.
Generally, banks raise Tier II capital by issuing subordinated debt to banks and large investors.