India central bank raises overseas perpetual debt limit for banks

MUMBAI: The Indian central bank has raised the limit for perpetual debt that banks can raise overseas and use as part of their core capital, according to a circular late on Monday.

Perpetual debt is debt that does not have a maturity date.

Perpetual debt issued in foreign currency or in Indian rupees overseas will be eligible for inclusion in banks’ additional tier-1 capital of up to 1.5% of risk weighted assets, the RBI said.

Additional tier-1 capital is the core capital of lenders.

Earlier, the RBI had set the limit for such perpetual debt in bank capital at 1.5% of risk assets but said that less than half of this can be raised in foreign currency or in rupees overseas.