Current Affairs · Financial Sector Reforms
Considering the recommendation by NaBFID to increase the partial credit enhancement (PCE) cap from 20% to 50% for infrastructure bonds, which of the following is the most accurate reason this proposal could lead to strengthened participation of corporate issuers in India's bond markets?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It mandates RBI to guarantee returns on all infrastructure bonds
- 2A higher cap boosts bond ratings, enabling lower borrowing costs for issuers✓
- 3It reduces government borrowing and hence improves fiscal deficit
- 4PCE directly increases coupon payments to bondholders, making bonds more attractive
Correct answer
A higher cap boosts bond ratings, enabling lower borrowing costs for issuers
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