AT1 bonds or additional tier 1 bonds are unsecured bonds which have no maturity rate i.e. they have a perpetual tenure. These bonds are issued by banks to strengthen their tier 1 capital (core capital). They are subordinate to all other types of debts except common equity. They have call option, which the issuer uses to buy it back from the investors. Mutual funds (MF) are among the largest investors in this kind of bonds. The finance ministry asked SEBI to withdraw its recently imposed restrictions on MF investments in AT1 bonds.