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ARTICLE · 03 JULY 2017

PCE For Bonds By Banks Rationalised

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PCEs are financial assistance to issuer companies to enhance their credit ratings in order to attract more investors, particularly long-term investors, such as provident funds, pension fund and insurance companies.

IndiaFinance and Banking
Manisha Shroff
Manisha Shroff
Rolwine Alva
Rolwine Alva
Oindrila Bhowmik
Oindrila Bhowmik
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On 18 May 2017, the Reserve Bank of India (RBI) issued a circular on 'Partial Credit Enhancement to Corporate Bonds' (Circular) which rationalises the existing "Guidelines on Partial Credit Enhancement to Corporate Bonds by Banks" dated 24 September 2015 (PCE Guidelines) on the capital requirements during the lifetime of the bond in respect of which partial credit enhancement (PCE) is provided by banks.

PCE Guidelines – Brief Snapshot

PCEs are financial assistance to issuer companies to enhance their credit ratings in order to attract more investors, particularly long-term investors, such as provident funds, pension fund and insurance companies. The PCE Guidelines were issued bearing in mind the large financial requirements of the infrastructure sector and the risks associated with it. Typically, infrastructure projects have long gestation periods and require long term financing corresponding to the cash flows generated from the project. Banks, which are the

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