In order to develop corporate bond markets and encourage trading on stock exchange platform, SEBI has proposed to create a separate debt segment on stock exchanges, letting scheduled commercial banks become members of stock exchanges for the purpose of undertaking proprietary transactions. SEBI has also carried out amendments, in stock-brokers and sub-brokers regulations, in order to enable direct membership of banks and other institutional participants in the proposed debt segment.
The regulator has also come out with amendments in SEBI (Mutual Funds) Regulations, 1996, with respect to IDF (infrastructure debt fund). IDF-MFs would be allowed to invest funds received on account of pre-payment of principal or regular repayments of principal with respect to the underlying assets of IDF in bonds of public financial institutions and infrastructure finance companies. This can be done only if the AMC (asset management company) is unable to find the core assets such as debt assets or securitised debt of infrastructure companies, bank loans related to infrastructure and the like, for deployment of the amounts of principal. The tenure of the scheme would be allowed to be extended with the consent of two-thirds of its investors by value.
The market regulator has also widened the definition of strategic investors to include systemically important NBFCs registered with the RBI and FIIs registered with SEBI.
The new fund offer period will be increased up to 45 days from up to 15 days, and the specified transaction period (STP) to 45 days from 30 days only with respect to IDF schemes. As an alternative, SEBI has allowed private placement to less than 50 investors. An IDF scheme would be allowed to invest up to 30 per cent of its assets under management (AUM) in assets now below investment grade owned by sponsor/associate from the earlier 20 per cent subject to the condition that the sponsor/associate retains at least 30 per cent of the assets sold to the IDF till the assets are held in the IDF portfolio.