Q. Consider the following statements regarding Recapitalisation - Bonds:

Select the correct answer using the codes given below:

1 only

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2 only

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Both 1 and 2

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Neither 1 nor 2

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Solution

The correct option is A 1 only
Explanation:

Statement 1 is correct: The bonds issued for the purpose of recapitalization of the Public Sector Banks(PSB) are called recapitalization bonds. They are considered an important source for capital infusion into the PSB’s. They help to achieve the required Capital Adequacy Ratio of 12% as stipulated by RBI for PSB’s.

Statement 2 is incorrect: These are special-purpose bonds that are subscribed by banks themselves. They are neither tradable nor transferable. They are limited only to a specific bank and for a specified period.

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