With regard to banks being allowed to invest in infrastructure bonds issued by other banks, the Reserve Bank of India has capped a bank’s investment in a specific issue of such bonds at 2% of its tier-I capital or 5% of the issue size, whichever is lower.
It also said that an investing bank’s aggregate holding in such bonds will be capped at 10% of its total non-SLR investments. RBI said that not more than 20% of the primary size of such bond issuance can be allotted to banks.
It added that banks cannot hold their own bonds.
RBI also stated that investments in such bonds are not be held under the held-to-maturity (HTM) category.
The RBI had earlier allowed banks to invest in infrastructure bonds issued by other banks.