RBI blocks coupon payment by bank

Singapore

INDIA's central bank has blocked a small local lender from paying a coupon on its subordinated bonds after its capital ratio dropped below the regulatory minimum, highlighting the risks investors face in the country's thinly capitalised banking system.

The Reserve Bank of India (RBI) has advised Kerala-based Dhanlaxmi Bank to defer the July 30 payment on the Upper Tier 2 Series I bonds to a later year, according to a stock exchange filing. Under the terms of the issue, coupon payments are subject to compliance with the RBI's minimum capital requirements.