SEBI modifies rules to buy 'rupee-denominated'corporate debt
Published: Jul 21, 2017
By TIOLCORPLAW News Service
MUMBAI, JULY 21, 2017: INDIA's market regulator, Stock Exchange of India (SEBI) said on Thursday that the Combined Corporate Debt Limit (CCDL) shall be available on tap for investment by foreign investors till the overall investment reaches 95%, after which, the auction mechanism shall be initiated for allocation of the remaining limits.
Once that 95% limit is reached, National Securities Depository Ltd (NSDL) and Central Depository Services India Ltd (CDSL) shall direct the custodians to halt all Foreign portfolio investment (FPI) purchases in corporate debt securities and the same would be informed to National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Upon receipt of information from the depositories, the exchange (starting with BSE) shall conduct an auction for the allocation of unutilised debt limits on the second trading day from the date of receipt of intimation from the depositories. Thereafter, the auction shall be conducted alternately on NSE and BSE.
The auction shall be held under a format only if the free limit is greater than or equal to INR 100 cr. However, if the free limit rem ains less than Rs. 100 cr for 15 consecutive trading days, then an auction shall be conducted on the sixteenth trading day to allocate the free limits.
Furthermore, SEBI said that Indian corporate issuers would also be prevented from selling rupee-denominated debt abroad until the foreign ownership in corporate debt falls below 92% of the quota.
All other terms and conditions for FPI investments in listed and unlisted corporate debt securities shall remain the same. The depositorie s shall put in place the necessary systems for the daily reporting by the custodians of the FPIs . The exchanges shall disseminate the auction summary on their respective websites.