[Opinion] SEBI’s Roadmap for Debt Market Development | Tackling Compliance Issues

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  • Last Updated on 24 November, 2023

Debt Market Development

CS Vallabh M Joshi & Rutuja Umadikar – [2023] 156 taxmann.com 566 (Article)


Despite adequate presence of legal framework for issuance of debt securities, the debt market in India is not as dynamic as equity market. With a view to deepen the bond market, Union Budget 2018-2019 included a proposal that entities may be mandated to meet a certain percentage of their funding requirements from capital markets through issuance of corporate bonds. In line with budget announcement SEBI brought in circular dt: November 26, 2018 [‘November 2018 Circular’] whereby a new category of entities was formed termed as ‘Large Corporate [‘LC’]. LC meant those entities whose long-term borrowings exceeded Rs 100 crores. Long term borrowings were defined in November 2018 Circular. LCs were mandated to raise 25% of their borrowings from debt market in a block of three years. Considering prevailing market conditions SEBI in its board meeting dt: March 29, 2023, approved a proposal to extend compliance for LC for one year. SEBI also formed a ‘Working Group and Corporate Bond and Securitization Advisor Committee’ (‘CoBoSAC’) to recommend revised framework for LC. CoBoSAC recommended certain changes to be made to the framework of LC. Accordingly, SEBI floated a consultation paper for public comments on August 10, 2023, in this regard. In this article, we shall try to deliberate upon some of the criticalities with respect to this circular.


Consultation paper and comments received on the same were placed before SEBI Board for discussion. SEBI Board approved in its meeting held on September 21, 2023, approved the proposal for making amendment to LC framework after considering the consultation paper and comments received on it. Pursuant to this SEBI brought circular dt: October 19, 2023 [‘October 2023 circular’] notifying revised LC framework.

Implementation of October 2023 circular

Stock exchange to release list of entities covered under the LC framework: November 2018 Circular specified a format under which listed entities would have to declare whether they are LC or not. This disclosure was required to be given within a specified period from the end of the financial year (i.e., 30 days).

With the revised framework for LC listed entities are now not required to submit disclosure, submit any declarations. As per the October 2023 circular Point 5.1 stock exchanges would release a list identifying entities as LC. This list shall be issued on 30th June for listed entities having fiscal year of April to March and on 31st March for listed entities having fiscal year of January to December. This list would be available on stock exchanges website and entity identified as LC would be intimated separately. List of entities who would be LC will be prepared based on financial results submitted by listed entities as per regulation 52 and regulation 33 of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements), Regulations, 2015 [‘SEBI LODR’] filed by listed companies within 60 days from the end of financial year. If we refer to the format for filing of annual consolidated financials it does not provide for disclosure of ‘outstanding borrowing'[1]. An amount of outstanding borrowing would be required to ascertain whether a particular entity would be LC. Further the manner in which amount of outstanding borrowing is to be ascertained for categorizing an entity as LC as per October 2023 circular is different than outstanding borrowing amount provided in balance sheet. Outstanding borrowings or outstanding debt figure as would be reflected in the balance sheet of an entity cannot be considered as Outstanding Borrowing for the purpose of ascertainment of LC.

So, here even if October 2023 circular casts a responsibility on the stock exchange to provide a list of LC but stock exchange would not be able to get the number of outstanding borrowings from financials. To resolve this issue, the stock exchanges may have to ask for additional data from the listed entities. So, it needs to be seen whether stock exchanges would come up with a separate utility or XBRL file for getting this figure for identifying whether a particular entity is a LC.

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