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Business News/ Money / Sebi revises the fund-raising framework for issuance of debt securities by large corporates. Details here
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Sebi revises the fund-raising framework for issuance of debt securities by large corporates. Details here

The fund raising by issuance of debt securities by large corporates mandates them to raise a minimum of 25% of incremental borrowings in a financial year through issuance of debt securities

The large corporates include all listed entities, which have outstanding long-term borrowings of ₹1,000 crore or above Premium
The large corporates include all listed entities, which have outstanding long-term borrowings of 1,000 crore or above

The capital markets regulator Securities Exchange Board of India (Sebi) has released a circular for the revision of the framework for fund raising by issuance of debt securities by large corporates, or LCs.

The large corporates include all listed entities (barring the scheduled commercial banks) which have their specified securities or debt securities or non-convertible redeemable preference shares listed on a stock exchange and have outstanding long-term borrowings of 1,000 crore or above.

25% of incremental borrowings

The fund raising by issuance of debt securities by large corporations mandates them to raise a minimum of 25 percent of incremental borrowings in a financial year through issuance of debt securities that are to be met over a contiguous block of three years from financial year 2022 onwards.

The large corporates will endeavour to comply with the requirement of raising 25% of their incremental borrowings done during FY 2022, FY 2023, FY 2024 respectively by way of issuance of debt securities till March 31, 2024, failing which such large corporates will provide a one-time explanation in their annual report for FY 2024, Sebi circular reads.

At the end of three years, if there is a surplus in the requisite borrowings, there will be reduction in the annual listing fees of the financial year pertaining to debt securities or non-convertible securities, as shown in the table below.

This is how the incentive will be calculated:

% of surplus borrowing% of reduction in annual listing fees payable to the stock exchanges
0-15%             2% of annual listing fees
15-30%4% of annual listing fees
30-50%6% of annual listing fees
50-75%8% of annual listing fees
Above 75%10% of annual listing fees

And at the end of three years, if there is a shortfall in the requisite borrowings, a dis-incentive in the form of additional contribution to the core SGF (securities guarantee fund) will apply, as shown in the table below

% of shortfall in the actual borrowings Quantum of % of additional contribution
0-15% 0.015%
15-30%0.025%
30-50%0.035%
50-75%0.045%
above 75%0.055%

The new framework regulations will come into effect from April 1, 2024 onwards for the corporates that follow April-March financial year. And it will apply from Jan 1, 2024 for the large corporations which follow Jan-Dec as their financial year.

The regulator has clarified that the circular will come into effect with immediate effect and will replace the present chapter XII of the NCS master circular w.e.f. FY 2025.

 

 

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Published: 21 Oct 2023, 01:56 PM IST
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