[Umang Bhat Nair and Vedant Kashyap are fourth year BA. LL.B.(Hons.) students at the NALSAR University of Law, Hyderabad] Earlier this year, India witnessed its first issue of a Sustainability-Linked Bond (‘SLB’) by UltraTech Cement. This is in line with India’s endeavour to achieve all of UN’s Sustainable Development Goals by 2030. India also wishes to achieve a robust 175 gigawatt of renewable...
SEBI’s Proposed Framework for Corporate Bonds and Debenture Trustees
[Rashmi Birmole is a III year B.A., LL.B. student at ILS Law College, Pune] Infrastructure Leasing & Financial Services (“IL&FS”), a non-banking finance company (“NBFC”) belonging to a sub-category of systemically important non-deposit accepting core investment companies was, at the time, engaged in financing and developing infrastructure projects. In June 2018, the collapse of IL&FS...
FAQs on Borrowing by Large Corporates: Unveiling the Perplexity
[Pammy Jaiswal is a Partner at Vinod Kothari and Company and can be reached at [email protected]] Background The untiring efforts of the Securities and Exchange Board of India (SEBI) as well as the Government in uplifting the bond market is quite commendable. SEBI has started taking major steps towards the accomplishment of the budget announcement by the Government for the year 2018-19...
RBI’s Measures for NBFCs and HFCs
[Vineet Ojha is a Manager at Vinod Kothari Consultants Pvt Ltd] In most developed nations, the bond market is often several multiples larger than the equity market. The same cannot be said about the India’s corporate bond market, as it is still underdeveloped and therefore unable to meaningfully share the credit burden of the banking system. To ease the funding strains non-bank lenders face and...
The “Masala” in Rupee Denominated Bonds
[Anirudh Singh is a 4th year B.A LL.B (Hons.) student at NALSAR University, Hyderabad] Background Rupee Denominated Bonds (RDBs),more commonly known as “Masala Bonds”, are debt securities denominated in Indian rupees issued by Indian entities to overseas investors but settled in foreign currency. In other words, they are rupee denominated bonds issued to overseas buyers. Though these bonds are...
Will SEBI Succeed in Creating a Vibrant Bond Market?
[Rajeev Jhawar is an Executive at Vinod Kothari Consultants Pvt Ltd] As part of the budget this year, India sought to expand its bond market beyond the traditional ambit of sovereign debt. Pursuant to this, Securities and Exchange Board of India (SEBI) has initiated efforts to diversify borrowings of Indian corporates by mandating them to raise at least a quarter of their incremental funds from...
Investment by FPIs in Securitised Debt Instruments
[Anita Baid is a Senior Manager at Vinod Kothari Consultants P. Ltd] Investments by foreign portfolio investors (FPIs) in unlisted debentures and securitised debt instruments (SDIs) issued by Indian companies was allowed pursuant to a notification dated 27 February, 2017 issued by the Securities and Exchange Board of India (SEBI). Earlier in November, 2016, the Reserve Bank of India (RBI) had...
Measuring outputs v. outcomes: Did the restriction on foreign investment in local debt achieve the intended outcome?
[The following guest post is contributed by Anurag Dutt, Arpita Pattanaik and Bhargavi Zaveri, who are researchers at the Finance Research Group at the Indira Gandhi Institute of Development Research, Mumbai.] A good policymaking process requires significant regulatory capacity. Before the policy is enacted, the State must (a) identify a market failure and an appropriate intervention to address...
Foreign Portfolio Investments in Unlisted Non-Convertible Debentures
[The following post is contributed by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai.] Last month, the Reserve Bank of India (“RBI“) allowed Foreign Portfolio Investors (“FPIs“) to invest in unlisted non-convertible debentures (“NCDs“). This has been done by way of an amendment to the Foreign Exchange Management (Transfer or Issue of...
Liberalized Regime for Issuance of Masala Bonds
An attractive option for Indian companies raising finances is to issue rupee-denominated bonds to persons residing outside India. Popularly known as “masala bonds”, some of these may even be listed on foreign stock exchanges. Naturally, the legal regime governing these bonds, particularly from the purview of corporate law, securities regulation and foreign exchange laws is of relevance. Over a...
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