India to Bar Individuals From Buying Risky Type of Bank Bond
- AT1 notes can be written off if certain triggers are breached
- New rule may push up banks’ AT1 funding costs: Manglunia
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India’s capital markets regulator is barring individual investors from buying a riskier type of bank bond, citing the need to protect non-professional buyers.
Starting Oct. 12, only qualified institutional buyers can purchase banks’ Additional Tier 1 notes, the Securities and Exchange Board of India said in a circular late Tuesday. Purchases by retail investors account for only a small fraction of the market for such debt, but some individuals lost money on those securities when India seized Yes Bank Ltd. earlier this year, said Hemant Dharnidharka, chief executive officer at Dharni Wealth.