A
To extend the maturity period of perpetual bonds during economic downturns
B
To convert debt instruments compulsorily into government equity shares
C
To mandate regular interest payouts regardless of the bank's profitability
D
To allow a bank to erase or reduce bond liabilities when capital falls below statutory trigger points
Correct answer: (d) To allow a bank to erase or reduce bond liabilities when capital falls below statutory trigger points
Explanation
A write-down provision is a contractual clause that permits a bank to absorb losses by erasing or reducing bond liabilities when its capital drops below prescribed regulatory trigger points. This makes option D correct while disproving the other descriptions.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
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