SEBI Extends Compliance Period For 3 Years For Large Corporates To Raise 25% Of Incremental Borrowings Via Debt Market

Capital markets regulator SEBI on Friday extended the compliance requirement to three years for 'large corporates' to raise at least 25 per cent 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 per cent 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 per cent 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 on a review of the matter by the Securities and Exchange Board of India (SEBI). Large corporates are those that need to have an outstanding long-term borrowing of at least Rs 100 crore; a credit rating of 'AA and above and target to finance themselves with long-term borrowings (above 1 year).