Why small banks may struggle to raise money via bonds post LVB debacle
Synopsis
People tracking the bond market said these banks could face heat as investors are likely to demand a higher premium with the regulator setting a precedent of wiping out bond holdings. Some of the weak public sector banks, too, may see pressure on risk premium, they told ET.
KOLKATA/MUMBAI: Most small banks could find it challenging to raise funds through bond sales after the Reserve Bank of India wrote off tier-2 bonds of Lakshmi Vilas Bank in its rescue plan. People tracking the bond market said these banks could face heat as investors are likely to demand a higher premium with the regulator setting a precedent of wiping out bond holdings. Some of the weak public sector banks, too, may see pressure on risk
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