ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 19 April. Click Here for more information.
ForumIAS Answer Writing Focus Group (AWFG) for Mains 2024 commencing from 24th June 2024. The Entrance Test for the program will be held on 28th April 2024 at 9 AM. To know more about the program visit: https://forumias.com/blog/awfg2024
Zero-coupon bonds:
Source: The Indian Express
News: The government has used Zero-Coupon Bonds to recapitalize Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest bearing bonds valued at par.
Facts:
- What are Traditional Zero-Coupon Bonds? These are debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value. The difference between the purchase price of a zero-coupon bond and the par value indicates the investor’s return.
- What kind of Bonds are issued to Punjab & Sind Bank? These are non-interest bearing, non-transferable special Government of India(GOI) securities having a maturity of 10-15 years and issued specifically to Punjab & Sind Bank.
- How are they different from traditional Zero-Coupon Bonds? Though zero-coupon, these bonds are different from traditional zero-coupon bonds on one account — as they are being issued at par, there is no interest; in previous cases, since they were issued at discount, they technically were interest bearing.
