SRINAGAR, Dec 31: Demonstrating comfortable liquidity position and financial soundness, J&K Bank – the premier bank in the region – today made final repayment of bonds worth Rs 600 crores (principal) on maturity besides interest payment of Rs 54 crores for its 9 per cent Lower Tier-II bond along with coupon payments of other bonds amounting to Rs 46.25 crores.
In aggregate, the bank made a payment of Rs 700.25 crores to its bond holders.
Notably, the Bank had raised Basel II compliant Tier II Capital to augment its capital base, by issuing unsecured, redeemable, and non-convertible lower Tier II bonds aggregating to Rs 600 crores in the FY 2009-10, with maturity of 10 years for an annual coupon rate of 9 percent.
The whole amount of Rs 600 crores has been already phased out from Capital Adequacy (CRAR) computations, therefore the final redemption payment will have no impact on the Capital Adequacy Ratio (CAR) of the Bank as far as Capital position of the Bank is concerned. The Bank has reported Capital to Risk Weighted (CRAR) Ratio of 11.76 percent as on June 30, 2019, which is well above the regulatory requirement of 10.875 percent.
Experts describe it as a very positive development, for it demonstrates Bank’s ability to fulfill its financial commitments and boosts its ability to raise capital under the Basel-III norms, for future growth. The timely repayment of bonds, experts believe, shall also have a healthy impact upon the confidence of the depositors, investors and other stakeholders whose faith in J&K Bank remains unshakable.
The most critical aspect in the banking industry, said an analyst, is – the trust reposed by various stakeholders in a bank and therefore every commitment fulfilled by a bank enhances its credibility not only among its stakeholders but in the markets at large.