Bank of India (BoI) has decided to recall its upper Tier-II bonds issued in October 2008 worth Rs 500 crore, the bank said in a letter to investors. As per the terms of the information memorandum dated October 13, 2008, the bonds carry a coupon rate of 11.15% per annum payable annually for a 15-year tenure and with a call option on October 16, 2018. \u201cNotice is hereby given with the approval of appropriate authority that the bank has decided to exercise call option on the above bonds and declare 14th September, 2018 as record date for this purpose,\u201d BoI said in a letter to investors in the bond. Upper Tier-II debt is perpetual in nature and coupons on them can be deferred. The recall means that the bank\u2019s liability to the bondholders towards all their rights, including for payment, shall cease and stand extinguished from the call option date. \u201cFurther, bank will not be liable to pay any interest or compensation from the call option date. On the Bank dispatching\/remitting the amount as specified above in respect of the bonds, liability of the bank shall stand extinguished in all respects,\u201d BoI added in the letter. It is one of the 11 public-sector banks (PSBs) currently under the Reserve Bank of India\u2019s (RBI) prompt corrective action (PCA) framework. Lenders under this framework must conserve funds while selling non-core assets to boost their capital base. BoI\u2019s move to buy back its upper Tier-II bonds follows a similar action by Central Bank of India, which announced a premature buyback of its upper tier-II bonds and innovative perpetual debt instruments (IPDIs) worth Rs 3,024 crore in August. Earlier this year, at least four PSBs under PCA had decided to recall their respective additional Tier-1 bonds (AT-1) as trading in these instruments had almost ceased. AT-1 bonds are debt instruments that do not have a fixed maturity and, for the same reason, command a relatively higher coupon.