Which of the following statements is/are correct with reference to the zero coupon bonds issued by govt to recapitalise Punjab & sindh bank?

Answer & Explanation

Option: Both A & B

Explanation:

The government has used financial innovation to recapitalise Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest bearing bonds valued at par. Since these bonds are not tradable, the lender has kept them in the Held-To-Maturity (HTM) bucket, not requiring it to book any mark-to-market gains or losses from these bonds. Zero coupon bonds by private companies are normally issued at discount, but since these special bonds are not tradable these can be issued at par.