Zero coupon bonds
√The government has used financial innovation to recapitalise Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest bearing bonds valued at par.
√ These are special types of zero coupon bonds issued by the government after proper due diligence and these are issued at par.
√ These are “non-interest bearing, non-transferable special GOI securities”.
√ They have a maturity of 10-15 years and issued specifically to Punjab & Sind Bank.
√These recapitalisation bonds are special types of bonds issued by the Central government specifically to a particular institution.
√ It is not tradable, it is not transferable.
√ It is held at the held-to-maturity (HTM) category of the bank as per the RBI guidelines.
?focus area for prelims 2021
√zero coupon bonds ans characteristics