South Indian Bank's move on tier-2 bond won't disrupt sector: Fitch

Lender decision to not redeem the bonds does not indicate any weakness in capital position, says ratings agency

South Indian Bank’s recent decision to not redeem its tier-2 bonds before maturity is unlikely to have significant long-term market implications for the banking sector, Fitch Ratings said on Monday.

“We believe the action is bank-specific and not necessarily representative of the broader market, given the associated reputational risk,” Fitch said.

On November 25, reports quoted a spokesperson from South Indian Bank saying that the private sector lender had chosen to not exercise a five-year call option on tier-2 bonds due at the end of the previous month. A call option refers to the choice that a bank has to