HDFC Bank has benched two senior executives as it probes alleged mis-selling of Credit Suisse AT1 bonds. Christina Titus explains the high risks associated with these bonds, the consequent restrictions on their sale to retail investors and the allegations against HDFC Bank

l What are AT1 bonds?

AT1 OR ADDITIONAL Tier 1 bonds are perpetual, high-risk debt instruments that banks issue to meet regulatory capital adequacy norms under frameworks such as the Basel III accords. These bonds have no fixed maturity, and rank below other forms of debt but above common equity in the repayment hierarchy. The AT1 bonds are considered as going concern capital; the funds raised through these bonds will be used to meet the losses in case of a bank failure. Investors opt for AT1 bonds knowing they c

See Full Page