GUIDELINES FOR ISSUING PREFERENCE SHARES AS PART OF REGULATORY CAPITAL

It has been decided to allow the banks to issue the following types of preference shares in Indian Rupees :

• Tier I capital Perpetual Non-Cumulative Preference Shares (PNCPS)
• Upper Tier II capital
• Perpetual Cumulative Preference Shares (PCPS)
• Redeemable Non-Cumulative Preference Shares (RNCPS)
• Redeemable Cumulative Preference Shares (RCPS)

The Perpetual Non-Cumulative Preference Shares will be treated on par with equity, and hence, the coupon payable on these instruments will be treated as dividend (an appropriation of Profit & Loss Account). All other types of preference shares mentioned above will be treated as liabilities and the coupon payable thereon will be treated as interest (charged to Profit and Loss Account).