Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday proposed to review the framework for borrowings by large corporates.
The regulator proposed to raise the threshold for large corporates to ₹500 crore from the current ₹100 crore.
“It was felt that the threshold should be aligned with the threshold of high value debt listed entity to have uniformity in the regulations.This would also be a breather for companies with outstanding long term borrowings of less than ₹500 crore to prepare themselves for compliance with these provisions once the framework becomes applicable to them,” Sebi said.
The regulator has also proposed to remove the requirement of rating as a criteria for identifying any entity as large corporate and also the rule of of levying penalty for non compliance.
In 2018, in line with the budget announcement Sebi had mandated large corporates to raise at least 25% of their incremental borrowings during the financial year by issuing debt securities. This move was aimed to deepen the corporate bond market.
Following which, Sebi received representations from the industry.
Companies said raising funds from banks and financial institutions is a cost effective option as compared to raising of funds from debt securities.
In most of such cases, meeting with the requirement of 25% of incremental borrowing through debt securities has become costlier due to tightening liquidity and hikes in the benchmark rate, they said.
