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19 D HYBRID FINANCE
What is hybrid finance in the context of corporate finance?
Hybrid finance refers to financial instruments that combine characteristics of both debt and equity, such as convertible debentures, preference shares, and perpetual bonds, blurring the line between the two traditional categories.
What is the primary purpose of hybrid finance in capital structure management?
To combine debt and equity features for flexible capital raising.
Which RBI guidelines govern the issuance of hybrid capital instruments by Indian banks?
RBI's Master Circular on Basel III Capital Regulations governs hybrid capital instruments, specifying eligibility criteria under Additional Tier 1 (AT1) and Tier 2 capital buckets for Indian banks.
What is the Basel III minimum Common Equity Tier 1 (CET1) ratio required for Indian banks?
Minimum CET1 ratio is 5.5% under RBI Basel III norms.
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