Regulators of Debt Market
Post on 08-May-2015
610 Views
Preview:
DESCRIPTION
Transcript
A Debt Market Presentation
Regulatory Aspects OfDebt Market In India
A Presentation by:
Shashank Udupa Manohar Rao
Ashutosh Athavale Parita Thakkar
Amar Vora Yash Thakkar
Purvi Visaria
A Debt Market Presentation
Topics To Covered
Introduction to the Regulators of Debt Market
• Ashutosh Athavale
Government Securities Act, 2006
• Parita Thakkar
Government Securities Regulation Act, 2007
• Purvi Visaria
SEBI (Disclosure and Investor Protection) Guidelines, 2000
• Yash Thakkar, Amar Vora
SEBI (Issue and Listing of Debt Securities) Regulations, 2008
• Manohar Rao
Recent Data & Analysis, Conclusion
• Shashank Udupa
A Debt Market Presentation
Ashutosh Athavale
Manohar Rao
Shashank Udupa
Amar Vora
Purvi Visaria
Parita Thakkar
Yash Thakkar
A Debt Market Presentation
Introduction to the Regulators ofDebt Market
Debt Market In Depth..
A Debt Market Presentation
RBI
Issuer Of Debt Instruments
Started the Banking Ombudsman Scheme.
Determines the investment of commercial
banks in debt.
Reserve Bank Of India
A Debt Market Presentation
SEBI
To require the Stock Exchange to amend by
their laws.
Secondary Role In Regulatory Aspect
Determines the guidelines for raising
money through public issues
SEBI is also the main regulator for Mutual
Funds
Securities & Exchange Board of India
A Debt Market Presentation
Government Securities Act, 2006
A security created and issued by the Government for the purpose
of raising a public loan..
A Debt Market Presentation
Forms of Government Security
Promissory Note Bond Bearer Bond Stock Certificate
Constituents of Debt Market
A Debt Market Presentation
Stock
Registered in the books of the RBI for which
a stock certificate is issued; or held at the
credit of the holder in the SGL account
including the CSGL account maintained in
the Books of the RBI
The transfer of the Government securities
shall be made in such form and in such
manner as may be prescribed.
A Government Security
A Debt Market Presentation
FAQ
When did the G S Act and the G S Regulations come into force and to which
Government securities do they apply? The G S Act and the G S Regulations came into force with effect from December 1, 2007.
The G S Act applies to Government securities created and issued by the Central
Government or a State Government, whether before or after the commencement of this
Act. The G S Act will apply to all Government securities created and issued even prior to
December 1, 2007.
What does one mean by Government security in the form of Stock? Stock means a Government security registered in the books of RBI for which a Stock
Certificate (SC) is issued or which are held at the credit of the holder in the Subsidiary
General Ledger (SGL) account maintained in the books of RBI and transferable by
registration in the books of RBI.
A Debt Market Presentation
Government Securities Regulations, 2007
Made by the Reserve Bank of India to carry out the purpose of the
Government Securities Act..
A Debt Market Presentation
Regulations To The Different Forms
Government security held in the form of
Government Promissory Notes is transferable by
endorsement and delivery.
Government securities held in the form of A
Stock Certificate, SGL account including the
CSGL account & Bond Ledger Account are
transferable, before maturity, by execution of
forms - III, IV & V respectively appended to the
Government Securities Regulations.
Promissory notes and stock
A Debt Market Presentation
Bond & SGL CSGL
A bearer bond is transferable by delivery and the person in possession
of the bond shall be deemed to be the owner of the bond.
Government securities held in SGL account including the CSGL account
or bond ledger account shall also be transferable by execution of a deed
in an electronic form under digital signature.
Bond and SGL CSGL
A Debt Market Presentation
FAQ
Are Government securities eligible for creation of pledge,
hypothecation or lien? Yes. Pledge, hypothecation or lien may be created in respect of Government
securities held in the form of SC, BLA, SGL/CSGL and the holder of Government
securities in such forms may avail of loan facility by keeping such securities as
collateral towards loan. However, Government securities issued in the form of
GPN and bearer bonds are not eligible for creation of pledge, hypothecation or
lien.
Whether Government securities are eligible for conversion, consolidation, sub-
division, renewal? Yes. Government securities are eligible for conversion from one form of holding to another
as well as consolidation, sub-division and renewal as per the terms and conditions
prescribed in the G S Regulations.
A Debt Market Presentation
SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000
SEBI has issued Securities and Exchange Board of India (Disclosure
and Investor Protection) Guidelines in 2000 ..
A Debt Market Presentation
Guidelines For Issue of Debt Instruments
The issuer making a public issue or rights issue of debt
securities shall appoint one or more debenture trustees in
accordance with the provisions of Section 117B of the
Companies Act, 1956.
The issuer making a public issue or rights issue of debt
securities shall appoint one or more Merchant Bankers.
The issuer shall enter into an arrangement with a depository
registered with the SEBI for dematerialization of the debt
securities that are proposed to be issued to the public.
The issuer shall give an option to the subscribers to receive
the debt securities either in the physical form or in
dematerialized form
A Debt Market Presentation
Advertisements of Public Issues
The issuer company shall make an advertisement in an
English national Daily with wide circulation, one Hindi
National newspaper and a regional language
newspaper with wide circulation at the place where
the registered office of the issuer is situated
At the time of filing of the offer document with the
Registrar of Companies.
Issue Opening Date, Issue Closing Date.
And contain the minimum disclosures as per Schedule
IV.
A Debt Market Presentation
Requirement of Credit Rating
No public issue or Rights issue shall be made unless
credit rating from a credit rating agency has been
obtained.
For a public or rights issue greater than or equal to
Rs. 100 crores two ratings from two different credit
rating agencies shall be obtained.
Where credit rating has been obtained from more
than one credit rating agencies, all credit ratings, shall
be disclosed.
All credit ratings obtained during the three years for
any listed security of the issuer company shall be
disclosed in the offer document.
A Debt Market Presentation
Requirement Of Debenture Trustee
In case of issue of debentures having maturity more
than 18 months, the issuer shall appoint a Debenture
Trustee.
The name of the debenture trustee must be stated in
the offer document.
A trust deed must be executed by the issuer
company in favor of the trustee within six months of
the closure of the issue.
Trustees of the debenture issue shall be vested with
the power for protecting the interest of the
debenture holders.
A Debt Market Presentation
Debenture Redemption Reserve (DRR)
A company has to create Debenture Redemption Reserve (DRR) in case
of issue of debentures with maturity of more than 18 months.
The DRR should be created in accordance with the following provisions:
• Company shall create DRR equivalent to 50% of the amount of
debenture issue before debenture redemption commences.
• Withdrawal from DRR is permitted only after 10% of the debenture
liability has been actually redeemed by the company.
• The requirement of creation of DRR shall not be applicable in case
of issue of debt instruments by infrastructure companies.
A Debt Market Presentation
Distribution Of Dividends
In the case of existing issuers, prior permission of the lead
institution for declaring dividend exceeding 20% or as per
the loan covenants is necessary if the issuer does not
comply with institutional condition.
In case of New companies, distribution of dividend shall
require approval of the trustees to the issue and lead
institution, if any
Dividends may be distributed out of profit of particular years
only
If residual profits after transfer to debenture redemption
reserve are inadequate to distribute reasonable dividends,
issuer may distribute dividend out of general reserve.
A Debt Market Presentation
Other Provisions
No company shall issue Fully Convertible Debentures having conversion
period of more than 36 months, unless conversion is made optional
with “Put” and “Call” option.
No issue of debentures by any issuer company shall be made for
acquisition of shares or providing loan.
Premium amount and time of conversion shall be determined by the
issuer company.
The interest rate for debentures can be freely determined by the issuer
company.
A Debt Market Presentation
SEBI (ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008
Issue and Listing of Debt Securities was Implemented by SEBI & has
simplified the Debt market and given it structure..
A Debt Market Presentation
Issue Requirements for Public Issues
Electronic Issuance.
Price Discovery through Book Building.
Minimum Subscription.
Listing of Debt Securities.
A Debt Market Presentation
Continuous Listing Conditions:
Should comply with the conditions of listing.
Rating obtained by an issuer should be periodically reviewed.
Change in rating should be promptly disseminated to investors.
Debenture trustee should disclose the information to the investors and
the general public by issuing a press release.
A Debt Market Presentation
Impact of Regulatory Changes
A Debt Market Presentation
Impact On The Economy
India’s growth to 5.8 % in 2013 from 6% in 2012
Corporate debt outstanding which stood
at Rs. 7.9 trillion in June 2010, has grown to Rs.
12.9 trillion in March 2013.
NSE has grown from Rs.6.5 trillion in 00-01 to
Rs.61 trillion in 2011-12.
The government and the corporate sector
mobilized Rs. 78,51,973 million from the primary
debt market.
A Debt Market Presentation
Future of India’s Debt Market
Regulations have had a positive impact on the market which has
moved from a credit market to a securities market..
A Debt Market Presentation
The Future
RBI has started publishing SGL data.
Availability of information and increased
interest in the debt market – research reports,
seminars, discussions, newspaper articles, etc.
Encouragement for FDI.
Larger amounts being raised by the corporate
sector.
A Debt Market Presentation
Acknowledgements
We would like the thank Mr. Abhijeet Sir for giving us an insight into the
Debt Market of our country which has helped us enormously to
understand the working of the Financial system in India.
Source: Wikipedia
• RBI
• Investopedia
top related