Bank of India says it can absorb mark-down of recapitalisation bonds

Lender makes statement as central bank expresses concern at the recapitalisation of state-owned lenders through zero-coupon bonds.

State-owned Bank of India (BOI) has said it can absorb any burden of marking down recapitalisation bonds issued in lieu of equity shares to the government without fresh capital infusion. The discounting, to be done by fair-value method, could halve the bonds' value to about Rs 1,500 crore.

The lender’s Capital Adequacy Ratio was 16.66 with Common Equity tier I ratio of 13.16 per cent. On Monday. BOI stock closed 2.1 per cent lower at 51.4 per share on BSE.

The Reserve Bank of India has expressed concern at the recapitalisation of public sector banks through zero-coupon bonds (ZCBs), raising