Mumbai: Market regulator Sebi (Securities and Exchange Board of India) on Friday allowed infrastructure finance companies to raise funds overseas through long-term corporate bonds.
“It has been decided that Non-Banking Financial Companies (NBFCs) categorised as Infrastructure Finance Companies (IFCs) by the Reserve Bank of India (RBI) shall also now be considered eligible issuers for the purposes of FII Investment under the corporate debt long term infra category,” the Sebi said in a circular.
This fund raising tool was so far limited to companies in the infrastructure sector.
Investments in such bonds shall have a minimum lock-in period of three years. However, during the lock-in period, FIIs will be allowed to trade amongst themselves. During the lock-in period, the investments cannot, however, be sold to domestic investors.
In a bid to facilitate fund flow in the infrastructure sector, the government has recently enhanced FII limit from $5 billion to $25 billion for corporate bonds issued by companies in the infrastructure sector with a residual maturity of over five years.