SEBI extends compliance period for 3 years for large corporates to raise 25% of incremental borrowings via debt market

Currently, the rules mandate large corporates to mobilise a minimum of 25% of their incremental borrowings over a contiguous block of two years

March 31, 2023 04:28 pm | Updated 07:35 pm IST - New Delhi

The Securities and Exchange Board of India on March 29 approved a framework to prevent fraud by stock brokers. Image for representational purpose only.

The Securities and Exchange Board of India on March 29 approved a framework to prevent fraud by stock brokers. Image for representational purpose only. | Photo Credit: Reuters

Capital markets regulator Securities and Exchange Board of India (SEBI) on March 31 extended the compliance requirement to three years for 'large corporates' to raise at least 25% of their incremental borrowings through debt securities to a contiguous block from two years at present.

This comes after the board of SEBI approved a proposal in this regard on Wednesday.

Currently, the rules mandate large corporates to mobilise a minimum of 25% of their incremental borrowings in a financial year through the issuance of debt securities which has to be met over a contiguous block of two years.

In a circular, SEBI "decided that the contiguous block of two years over which large corporates need to meet the mandatory requirement of raising minimum 25% of their incremental borrowings in a financial year through issuance of debt securities will be extended to a contiguous block of three years (from the present requirement of two years) reckoned from FY 2021-22 onwards."

In case a large corporate is unable to comply with the requirement, then such entities are required to provide an explanation for such a shortfall to the stock exchanges in a prescribed manner.

The latest decision has taken into account the representations from the market participants and a review of the matter by the Securities and Exchange Board of India.

Large corporates are those that need to have an outstanding long-term borrowing of at least ₹100 crore; a credit rating of 'AA and above and a target to finance themselves with long-term borrowings (above 1 year).

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