The capital markets regulator Securities Exchange Board of India (Sebi) has given a fresh incentive to large corporates to meet their incremental financing needs through issuance of debt securities.
In its latest board meeting, the regulator took a series of measures to incentivise large corporates in raising funds through the debt markets. These measures include the following:
A. A higher monetary threshold has been specified for defining large corporates, thereby reducing the number of entities qualifying as large corporates.
B. Removal of penalty on large corporations which are not able to raise a certain percentage of incremental borrowing from the debt market.
C. Introduction of incentives and moderates disincentives.
Another move that reportedly gave an impetus to the debt market was in July 2021 when Sebi announced the launch of a corporate debt market development fund.
Sebi released a framework for this fund stating that this fund will comply with the guarantee scheme for corporate debt as notified by the finance ministry.
The key constituents of this fund are low duration government securities, treasury bills, tri-party repo on G-Sec and guaranteed corporate bond repo with maturity not exceeding 7 days.
Unclaimed amount from IPEF
In the same directive, Sebi has also streamlined the framework for credit of unclaimed amounts of investors in listed entities other than companies, REITs and InvITs to the investor protection and education fund (IPEF).
Following the prescribing of a uniform process of claim for such amounts in a streamlined manner, investors may now approach the debt listed entity/ REIT/ InvIT to claim their unclaimed amounts, thereby ensuring minimal disruptions in the claim process for investors.
Besides this, Sebi also extended the timeline for compliance with enhanced qualification and experience requirements for investment advisors.
Earlier investment advisors were meant to comply with enhanced qualification and experience requirements by Sept 30, 2023 but based on representations received from various stakeholders, it was decided to allow time up to Sep 30, 2025 to comply with these requirements.
What are short duration debt funds?