Finance ministry asks Sebi to revoke 100-year maturity rule on AT1 bonds

Revised norms to treat all perpetual bonds as 100-year tenor to be withdrawn

The finance ministry has written to the Securities and Exchange Board of India (Sebi), requesting it to withdraw a rule that fixes the tenor or maturity of all perpetual bonds at 100 years.

The letter states the clause on valuation is disruptive in nature and could lead to higher borrowing cost for companies at a time when economic recovery is nascent.

“Considering the capital needs of banks … and the need to source the same from the capital markets, it is requested that the revised valuation norms to treat all perpetual bonds as 100 year tenor be withdrawn,” said the letter.

On Wednesday,