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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 ..... 2022 onwards. 2. Taking into account prevailing market conditions and representations 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchanges. 4.3. For an entity identified as a LC, the following shall be applicable: (a) From FY 2025 onwards, the requirement of mandatory qualified borrowing by an LC in a FY shall be met over a contiguous block 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 5.3. As regards the incentive/ dis-incentive with respect to the contribution to the core SGF, the Stock Exchanges shall share relevant information with the LPCC by May 31 st for LCs following April-March as their financial year or by February 28 th /29 th 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 criteria 4 : In order to bring the existing framework in line with this circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 50.01-75% 8 % of annual listing fees 5. above 75% 10 % of annual listing fees Table II: Credit in the form of reduction in contribution to the Core SGF by the LCs: the quantum of such credit shall be computed as per the following table: Sl. No. % of Surplus borrowing for the block starting FY T as on last day of FY T+2 Quantum of Credit 1. 0-15% 0.01% 2. 15.01-30% 0.02% 3. 30.01-50% 0.03% 4. 50.01-75% 0.04% 5. above 75% 0.05% In case of eligible issuers 5 for LPCC, it is proposed that incentive shall be set off within six years of obtaining the incentive. In case of non-eligible issuers for LPCC, the incentive shall be carried forward until utilization by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antum of additional contribution (as per the above table) Quantum of % of additional contribution falling in the category of % of shortfall in borrowing as per table IV (multiplied by) Z Annex - II Table 1 : Illustration on the applicability of framework and calculation of Shortfall/ Surplus for a listed entity: (all figures in Rs. Crore) Sr. No. Particulars FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 (A) Outstanding Borrowing as on March 31st of FY T-1 1100 1700 2000 800 1400 (B) Applicability of framework Yes Yes Yes No Yes (C) Qualified Borrowings for FY T 600 300 0 600* ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (N) Incentive to be provided in the form of less contribution to the Core SGF (Table - III IV of Annex-I) (Calculated only for FY T-2 ) as per (L) N.A. N.A. No Yes, 0.004 (= 0.02% of 20) 7 No (O) Disincentive to be collected in the form of additional contribution to the Core SGF (Table- V VI of Annex-II) (Calculated only for FY T-2 ) as per (L) N.A. N.A. Yes, 0.0175 (= 0.035% of 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 shortf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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