MUMBAI:  The Reserve Bank of India and the Insurance Regulatory and Development Authority have reached a consensus on allowing banks to issue Basel III-compliant additional Tier I bonds to insurance companies, sources close to the development told Cogencis.

The IRDA is likely to announce within the month a framework under which  insurance companies can invest in these fund raising instruments of banks. Banks have been looking at raising Tier I funds but the volatile overseas markets and the clauses on these bonds have been a deterrent. Last week, Bank of India Chairperson and Managing Director V.R. Iyer said the bank was ready to conduct such a fund raising but was awaiting steps from the government.

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