From next fiscal, 25% of borrowing via bond a must for large companies: Sebi

The move is in sync with the Budget announcements in February, with an aim to deepen the country's relatively shallow corporate bond market.

Starting 1 April 2019, large companies will have to raise 25 per cent of their incremental borrowings through the corporate bonds market, said Sebi in a circular on Monday.
 
For those who follow a calendar year as their financial year, the effective date will be January 1, 2020, market regulator Sebi said in a statement.
 
The capital market regulator defines large corporates as a listed entitiy (except banks), having an outstanding long-term borrowing of at least ₹100 crore and a credit rating of ‘AA and above. In case a large corporate is unable to comply with the requirement, it has to provide an explanation for such shortfall to the stock exchanges in a prescribed manner, it said.
 
The move is in sync with the Budget announcements in February, with an aim to deepen the country's relatively shallow corporate bond market.
 
The media reports quoting Sebi said large companies will need to have 25 per cent of their fresh borrowing needs with a maturity of more than one year funded from the corporate bonds market on an annual basis by the last day of the financial years 2020 and 2021 separately.
 
Subsequently from the financial year 2022, the rule gets more stringent where companies must meet the incremental 25 percent borrowing requirement over a "contiguous block of two years".
 
Source: Media reports

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