Public sector banks prepare to open AT-1, Tier-2 bond floodgates

They target raising Rs 54,800 cr in FY25

Public sector banks (PSBs) have proposed the Finance Ministry their plan to raise Rs 54,800 crore through Additional Tier-1 (AT-1) and Tier-2 bonds in the current financial year (FY25), 37 per cent more than the Rs 39,880 crore raised in FY24, according to an internal document reviewed by Business Standard.

 

Both AT-1 and Tier-2  bonds are regulatory capital instruments used by banks to meet capital adequacy requirements under Basel III norms, but they differ in risk and structure. AT-1 bonds, which lack a fixed maturity date, are considered higher risk as they can be written off during financial distress.