Fair valuation of recap bond: PSBs stare at Rs 13,000 crore-hit

Govt will continue to factor in such impact for future capital infusion

Public sector banks (PSBs) that received capital through recapitalisation (recap) bonds may have to take a hit of around Rs 13,000 crore following the Reserve Bank of India’s (RBI’s) directive to recognise these bonds at market value, according to ICRA.
 

However, despite the discounting of bonds by 44-45 per cent, the PSBs will continue to have tier-I capital adequacy above the regulatory requirement. There is, though, a possibility of some PSBs reporting losses for the fourth quarter of financial