It said these instruments will not qualify for Tier I capital, having failed the loss absorbency test in practice, resulting in reduction in the capital base of banks in India. The HC should have appreciated that the implications of their order are far-reaching, it said, adding that in the future, given such a precedent, it is likely that no potential investor would come forward to support bailing out a crippled bank, the government added. “Whether the decision-making process has been adhered to and whether it is within the competence of the administrator to write down AT1 bonds are the issues which will have wide ramifications if swarm are not settled by the SC,” the MoF stated in its appeal.
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