Tier I Bonds

Also known as Additional Tier I bonds, these unlike traditional bonds have few key features which makes them different. The first feature is that these bonds carry no maturity date and hence are also known as perpetual bonds. AT1 bonds carry a call option of 5 years and 10 years, which allows banks to redeem it at their own chosen period. 

Secondly, banks issuing AT-1 bonds can skip interest payments if the bank's capital falls below the regulatory requirement at the time when interest is due, this way the bank will not be at a risk of default. 

Third, if a bank is unsteady and needs rescuing, the RBI can anytime ask the bank to cancel its AT1 bonds without informing the investors. This category offers a high interest rate but carries considerable risk and hence should only be opted by investors with high risk-appetite.