CIRCULAR
SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/172 October 19, 2023
To,
All Listed Entities other than Scheduled Commercial Banks1
Recognized Stock Exchanges
Limited Purpose Clearing Corporations (LPCC)
Madam/Sir,
Sub: Ease 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)
1. Regulation 50B of SEBI (Issue and Listing of Non-Convertible Securities) Regulations,
2021 (NCS Regulations) read with Chapter XII of the NCS Master Circular2 on ‘Fund
raising by issuance of debt securities by large corporates’ (LC Chapter), inter-alia,
mandates LCs to raise a minimum 25% of their incremental borrowings in a financial year
through issuance of debt securities which were to be met over a contiguous block of three
years from Financial Year (FY) 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.
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.
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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 long term borrowings’ for the purpose of this
framework shall mean any outstanding borrowing with an original maturity of more
than one year but shall exclude the following:
i. External Commercial Borrowings;
ii. Inter-Corporate Borrowings involving the holding company and/ or subsidiary
and/ or associate companies;
iii. Grants, deposits or any other funds received as per the guidelines or directions
of Government of India;
iv. Borrowings arising on account of interest capitalization; and
v. Borrowings for the purpose of schemes of arrangement involving mergers,
acquisitions and takeovers.
and
c) have a credit rating of "AA”/“AA+”/AAA ", where the credit rating relates to the
unsupported bank borrowing or plain vanilla bonds of an entity, which have no
structuring/ support built in.
Explanation 3: In case a listed entity has multiple ratings from multiple rating
agencies, the highest of such ratings shall be considered for the purpose of this
framework.
4. Framework:
4.1. A listed entity, fulfilling the criteria as specified at paragraph 3.2 above, shall be
considered as a “Large Corporate” (LC).
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4.2. An LC shall raise not less than 25% of its qualified borrowings by way of issuance of
debt securities3 in the financial years subsequent to the financial year in which it is
identified as an LC.
Explanation 4: For the purpose of this framework, the expression "qualified
borrowings" shall mean incremental borrowing between two balance sheet dates
having original maturity of more than one year but shall exclude the following:
i. External Commercial Borrowings;
ii. Inter-Corporate Borrowings involving its holding company and/ or subsidiary
and/ or associate companies;
iii. Grants, deposits or any other funds received as per the guidelines or directions
of Government of India;
iv. Borrowings arising on account of interest capitalization; and
v. Borrowings for the purpose of schemes of arrangement involving mergers,
acquisitions and takeovers.
It is also clarified that the qualified borrowings for a FY shall be determined as per the
audited accounts for the year filed with the Stock Exchanges.
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 qualified
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
3 Debt securities as defined under SEBI (Issue and Listing of Non- Convertible Securities) Regulations, 2021
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(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 through debt securities is less than
25% of the qualified borrowings for FY "T"), a dis-incentive in the form of additional
contribution to the core SGF shall apply as specified in Table IV and Table V of
Annex-I to this circular.
Explanation 5: The actual borrowing done through issuance of debt securities by a
LC in FY “T”, shall first get adjusted with the deficit of the FY “T-2” if any, and
further, against the deficit of FY “T-1” if any. The remaining amount shall get
adjusted against the mandatory borrowings for FY “T”. This will also help to
minimize the disincentive, if any, that may accrue due to shortfall in the borrowings.
The same is explained by way of an illustration in Annex-II to this circular.
5. Responsibilities of Stock Exchanges:
5.1. Pursuant to submission of financial results by listed entities as per regulations 33 and
52 of LODR Regulations, the Stock Exchanges shall,
a. by June 30, for LCs following April-March as their financial year or
b. by March 31, for LCs following January-December as their financial year, as
applicable;
determine the list of LCs for the financial year. The Stock Exchanges shall co-ordinate
and release a uniform list of LCs for the financial year and place the same on their
websites. They shall also notify listed entities so identified as LCs by email, to enable
them to comply with the requirements.
5.2. Based on the financial results submitted by LCs, the Stock Exchanges shall, in co-
ordination with each other, calculate the incentive or dis-incentive as on the last day
of FY “T+2” for the block starting FY “T”. For LCs following April-March as their
financial year, the incentive or dis-incentive shall be calculated as on March 31, FY
“T+2” for FY “T”. Similarly, for LCs following January-December as their financial year,
the incentive or dis-incentive shall be calculated as on December 31, FY “T+2” for FY
“T”. The Stock Exchanges shall intimate the same to the LCs as follows:
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a. by May 31st for LCs following April-March as their financial year or
b. by February 28th/29th for LCs following January-December as their financial year,
as applicable.
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 31st for
LCs following April-March as their financial year or by February 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 Master Circular stands deleted.
7.2. Clause 3.1(b) of Chapter XII of the NCS Master Circular stands deleted
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; and
(b)have an outstanding long term borrowing of Rs. 100 cr. or above, where outstanding long-term borrowings
shall mean any outstanding borrowing with original maturity of more than one year and shall exclude external
commercial borrowings and inter-corporate borrowings between a parent and subsidiary(ies);and
(c)have a credit rating of "AA and above", where credit rating shall be of the unsupported bank borrowing or plain
vanilla bonds of an entity, which have no structuring/ support built in; and in case, where an issuer has
multiple ratings from multiple rating agencies, the highest of such ratings shall be considered for the purpose
of applicability of this framework.
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7.3. The aforesaid LCs shall endeavour to comply with the requirement of raising 25% of
their incremental borrowings done during FY 2022, FY 2023 and FY 2024
respectively by way of issuance of debt securities till March 31, 2024, failing which,
such LCs shall provide a one-time explanation in their Annual Report for FY 2024.
8. The circular shall come into force with immediate effect and shall replace the present
Chapter XII of the NCS Master Circular w.e.f. the FY 2025.The provisions of this circular
shall be appropriately incorporated in Chapter XII of the NCS Master Circular.
9. This Circular is issued in exercise of powers conferred under
9.1. Section 11(1) of the Securities and Exchange Board of India Act, 1992;
9.2. Regulation 55 (1) of the NCS Regulations; and
9.3. Regulation 101 of the LODR Regulations.
10. This Circular is available on SEBI website at www.sebi.gov.in under “Legal Framework”.
Yours faithfully,
Pradeep Ramakrishnan
General Manager
Department of Debt and Hybrid Securities
Tel No.: 022-2644 9246
Email ID: pradeepr@sebi.gov.in
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Annex I
Calculation of Incentive
Table I: Computation of Quantum of % of reduction in annual listing fees pertaining to
listed debt securities or non-convertible redeemable preference shares, payable to the
stock exchange by LCs:
Sl. No. % of Surplus borrowing % of reduction in annual listing fees payable to
as on last day of FY the Stock Exchanges by the LCs for FY “T+2”
“T+2” for the block
starting FY “T”
1. 0-15% 2 % of annual listing fees
2. 15.01-30% 4 % of annual listing fees
3. 30.01-50% 6 % of annual listing fees
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 Quantum of Credit
the block starting FY “T” as
on last day of FY “T+2”
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 issuers5 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 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 X
the debt market by the LC for FY “T” (A)
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
5 Eligible issuers as defined by LPCC for contribution to the core SGF
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Calculation of Dis-incentive
Table IV: Dis-incentive in the form of % of additional contribution to the Core SGF
Sl. % of shortfall in the actual borrowings Quantum of % of additional
no. as on last day of FY “T+2” for the block contribution
starting FY “T”
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. Particulars Amount (in Rs. Crores)
no.
1. Borrowings that should have been made from the X
debt market by the LC for FY “T” (A)
2. Actual borrowings in “Block of three years” (B) Y
3. Shortfall in borrowings (X-Y) (C) Z
4 % of shortfall in borrowing (C/A)*100
4. Quantum of additional contribution (as per the Quantum of % of additional
above table) contribution falling in the
category of % of shortfall in
borrowing as per table IV
(multiplied by) Z
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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. Particulars FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
No.
(A) Outstanding Borrowing as 1100 1700 2000 800 1400
on March 31st of FY ‘T-1’
(B) Applicability of framework Yes Yes Yes No Yes
(C) Qualified Borrowings for 600 300 0 600* 300
FY ‘T’
(D) Mandatory borrowing 150 75 0 0 75
through debt securities in
the current FY ‘T’ ( 25% of
(C))
(E) Block for compliance of FY 2025, FY FY 2027, N.A. FY 2029,
the mandatory borrowing 2026 and 2026 2028 and 2030 and
through debt securities 2027 2027 and 2029 2031
(applicable for Current FY 2028
‘T’)
(F) Actual borrowing done 75 25 0 95 150
through debt securities, if
any, for the current FY ‘T’
(G) Deficit/ excess carry N.A. N.A. (50) (75) 0
forwarded from FY 'T-2’, if
any
(H) Deficit/ excess carry N.A. (75) (75) 0 0
forwarded from FY 'T-1’, if
any
(I) Amount adjusted for FY 0 0 0 75 0
‘T-2’
(J) Amount adjusted for FY 0 25 0 0 0
‘T-1’
(K) Amount adjusted for FY 75 0 0 N.A. 75
‘T’
(L) Shortfall/ surplus in N.A. N.A. (50) 20 0
mandatory borrowing
through debt securities for
FY ‘T-2’ after adjusting
(M) Incentive to be provided in N.A. N.A. No Yes, 4% No
the form of reduction in of annual
listing fees (Table-II of listing
Annex-I) (Calculated only fees for
for FY ‘T-2’) as per FY 20286
(L)
6 FY2028 is T+2 for FY2026 (T). Surplus amount as of T+2 is 20 crores. Mandatory borrowing for the block period
starting FY2026 was Rs.75 crore. Thus, % of surplus = 20/75 = 26.67%. 26.67% falling in 15.01-30% category as
per table I of Annex-I shall correspond to 4% of annual listing fees.
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(N) Incentive to be provided in N.A. N.A. No Yes, No
the form of less 0.004 (=
contribution to the Core 0.02% of
SGF (Table - III & IV of 20)7
Annex-I) (Calculated only
for FY ‘T-2’) as per
(L)
(O) Disincentive to be N.A. N.A. Yes, 0.0175 No No
collected in the form of (= 0.035%
additional contribution to of 50)8
the Core SGF (Table- V &
VI of Annex-II)
(Calculated only for
FY ‘T-2’) as per (L)
(P) Deficit/ excess to be carry 0 (50) (75) 0 0
forwarded for FY ‘T-1’
after adjustment, if any
(Q) Deficit/ excess to be carry (75)# (75) 0 N.A. 75
forwarded for FY ‘T’ after
adjustment, if any
#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.
7 26.67% falling in 15.01-30% category as per table II of Annex-I shall correspond to quantum of 0.02%.
8 FY2027 is T+2 for FY2025 (T). Shortfall amount as of T+2 is Rs. 50 crore. Mandatory borrowing for the block
period starting FY2025 was Rs.150 crore. Thus, % of shortfall = 50/150 = 33.33%. 33.33% falling in 30.01-50%
category as per table IV of Annex-I shall correspond to quantum of 0.035%.
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