........“The transition to Basel III is not coming at a good time for Indian banks, as they are facing asset-quality issues and the overall business outlook looks grim,” said another banker. There are several hurdles to these new bonds in India, not least being the lack of understanding on the buy side. The loss-absorption features required for sub bonds to count towards Basel III capital may put the paper beyond the reach of investors like pension funds and insurance companies, if their funds are not allowed to invest in equities. To qualify as additional Tier-I or Tier-II capital, bonds will need to write down to zero if the Reserve Bank of India (RBI) deems a bank to be non-viable, forcing sub bondholders to wear losses before any public funds are used in a bail-out........
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