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TMI BlogEase of doing business and development of corporate bond markets – revision in the framework for fund raising by issuance of debt securities by large corporates (LCs)X X X X Extracts X X X X X X X X Extracts X X X X ..... tions from market participants, the framework for fund raising by issuance of debt securities by LCs is revised as specified in further paragraphs. 3. Applicability of the framework: 3.1. This framework is applicable with effect from April 01, 2024 for LCs following April-March as their financial year. This framework is applicable with effect from January 01, 2024, for LCs which follow January-December as their financial year. Explanation 1: The term "Financial Year" here would imply April-March or January-December, as followed by an entity. Thus, FY 2025 shall mean April 01, 2024 - March 31, 2025 or January 01, 2024 - December 31, 2024, as the case may be. 3.2. The framework shall be applicable for all listed entities (except for Scheduled Commercial Banks), which as on last day of the FY (i.e. March 31 or December 31): a) have their specified securities or debt securities or non-convertible redeemable preference shares listed on a recognised Stock Exchange(s) in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations); and b) have outstanding long term borrowings of Rs.1000 crore or above. Explanation 2: 'Outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of three years. Accordingly, for listed entities following April-March/January-December as their financial year, a listed entity shall be identified as an LC, as on last day of March 31, FY "T-1"/ December 31, FY "T-1" and shall have to fulfil the requirement of incremental borrowing for FY "T", over FY "T", "T+1" and "T+2". (b) If at the end of three years i.e. last day of FY "T+2", there is a surplus in the requisite borrowings (i.e. the actual borrowings through debt securities is more than 25% of the qualified borrowings for FY "T"), the following incentives shall be available to the LC: (i) Reduction in the annual listing fees of FY "T+2" pertaining to debt securities or non-convertible redeemable preference shares as specified in Table I of Annex-I to this circular; and (ii) Credit in the form of reduction in contribution to the Core Settlement Guarantee Fund (SGF) of LPCC as specified in Table II and Table III of Annex-I to this circular. (c) If at the end of three years i.e. last day of FY "T+2", there is a shortfall in the requisite borrowings (i.e. the actual borrowings t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebruary 28th/29th for LCs following January-December as their financial year, as applicable. 5.4. The Stock Exchanges shall make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above directions in coordination with one another to achieve uniformity in approach. 5.5. The Stock Exchanges shall put in place necessary systems and infrastructure for implementation of this circular. 6. Responsibilities of the LPCC: The LPCC shall make changes and put in place necessary infrastructure and system for LCs to comply with the provisions of incentive and dis-incentive w.r.t contribution to the core SGF. They shall also co-ordinate with the Stock Exchanges to ensure that LCs comply with these provisions. 7. Requirements for LCs identified based on the erstwhile criteria4: In order to bring the existing framework in line with this circular for the LCs that were identified based on the erstwhile criteria as on December 31, 2020/ March 31, 2021, December 31, 2021/ March 31, 2022 and December 31, 2022/ March 31, 2023, the following dispensations are provided: 7.1. Clause 2.2(d) of Chapter XII of the NCS Regulations stands deleted. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried forward until utilization by the LC as and when it is classified as eligible by the LPCC. The six-year period in case of such issuers shall begin from the year it is eligible. Table III: Manner of computation of Incentive Sl. no. Particulars Amount (in Rs. Cr) 1. Borrowings that should have been made from the debt market by the LC for FY "T" (A) X 2. Actual borrowings in "Block of three years"(B) Y 3. Surplus borrowings (Y-X) (C) Z 4. % of surplus borrowing (C/A)*100 5. Quantum of credit Quantum of credit falling in the category of % of surplus borrowing as per table II (multiplied by) Z Calculation of Dis-incentive Table IV: Dis-incentive in the form of % of additional contribution to the Core SGF Sl. no. % of shortfall in the actual borrowings as on last day of FY "T+2" for the block starting FY "T" Quantum of % of additional contribution 1. 0-15% 0.015% 2. 15.01-30% 0.025% 3. 30.01-50% 0.035% 4. 50.01-75% 0.045% 5. above 75% 0.055% Table V: Manner of computation of Dis-incentive Sl. no. Particulars Amount (in Rs. Crores) 1. Borrowings that should have been made from the debt market by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 50)8 No No (P) Deficit/ excess to be carry forwarded for FY 'T-1' after adjustment, if any 0 (50) (75) 0 0 (Q) Deficit/ excess to be carry forwarded for FY 'T' after adjustment, if any (75)# (75) 0 N.A. 75 #All figures written in brackets ( ) should be considered as shortfall or otherwise as surplus. *For FY2028, the figure 600 crore refers to the borrowings for the FY. ---- 1 whose specified securities or debt securities or non-convertible redeemable preference shares are listed on recognised Stock Exchanges 2 Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated August 10, 2021 as amended from time to time. 3 Debt securities as defined under SEBI (Issue and Listing of Non- Convertible Securities) Regulations, 2021 4 All listed entities (except for Scheduled Commercial Banks), which as on last day of the FY(i.e. March 31 or December 31): (a)have their specified securities or debt securities or non-convertible redeemable preference shares, listed on a recognised stock exchange(s) in terms of SEBI LODR Regulations, 2015 ..... 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