The Securities and Exchange Board of India (SEBI) aims to reduce the time required to make a public issue of debt securities and bring it on par with that of an equity offering. In a discussion paper released on Friday, the capital market regulator has said that it wants to reduce the time line from the current 12 days to six days.
“In order to ensure uniformity, standardization and streamlining of issuance of debt securities with that of equity shares and convertibles, it is proposed to reduce the time lines for the public issue of debt securities from T+12 to T+6,” said the discussion paper.
T refers to the day when the issue closes for subscription.
“It is felt that the present timeline of T+12 for listing and commencement of trading in case of public issue of debt securities is inefficient in terms of cost and time and does not ensure smooth functioning for the public issuance process,” added the SEBI paper.
In order to reduce the time line, the capital market regulator has proposed making ASBA – Application Supported by Blocked Amount – mandatory for applying in such debt issuances.
ASBA refers to an online mechanism wherein the application money is kept blocked in the applicant's account and is debited only at the time of allotment. This effectively does away with the whole process related to refund of money to investors in instances wherein the issue is oversubscribed.
According to SEBI, nearly 89% of the investors who applied in public issue of debt securities in 2016 and 2017 applied in DEMAT form.
