Interest Payments and Returns

Can the issuer skip interest payment of Tier I & II bonds?


If the issuer fails to maintain a certain capital ratio, then the issuer can skip the interest payments of Tier I and Tier II bonds. Also, in the event that a Bank is suffering losses and does not have enough capital reserves to pay interests of its Tier I, it can skip interest income of Tier I Bonds. If it still falls short of reserves in paying the interest of Tier II Bonds, it can skip the payment for these Tier II Bonds as well.