To enable insurance and pension funds to invest in India’s infrastructure companies, Reserve Bank in September 2015 allowed banks to do PCE of bonds. What is the full form of PCE?
To enable insurance and pension funds to invest in India's infrastructure companies with credit rating of BBB minus and above, the RBI on 24 September 2015, allowed banks to do partial credit enhancement (PCE) of bonds offered by such infrastructure companies. • Instruments with BBB rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. • Banks have been allowed to provide credit enhancement of up to 20 per cent of the total issuance. • Credit enhancement by banks ensures higher credit ratings and enables borrowers access to capital which otherwise could not have been accessed besides reducing their cost of borrowing.