While inviting suggestions from the members of public, Capital markets regulator Securities Exchange Board of India (Sebi) has released a consultation paper on review of issue and listing of debt instruments and security receipts. For those who are unaware, Sebi had set up a working group to review the regulations relating to Securitised Debt Instruments (SDI), which gave its list of proposals.
Securitization of debt is a process in which assets are pooled together and then sold to investors in small units. The cash flow from these underlying assets is passed on to investors through instruments.
In view of the recommendations of the working group, directions issued by the RBI and meetings with various market participants, Sebi has now released a list of proposals for public consultation.
Key proposals with regards to debt instruments
Ticket size: The minimum ticket size i.e., size of investment by a single investor will be ₹crore for regulated entities such as banks, small finance banks and NBFCs.
No of investors: The number of persons to whom offer or invitation can be made in case of issuance of SDI (Securitised Debt Instruments) on a private placement basis and which are proposed to be listed can be revised to 200. The proposal also mentions that an offer or invitation to investors in excess of such number will require being undertaken as a public issue of SDIs.
While calculating the limit of 200 persons, invitation made to qualified institutional buyers will be excluded.
Offer period: The minimum and maximum number of days of which the public offer can remain open will be 3 and 10 days, respectively.
Debt/receivable: This will specify listed debt securities, trade receivables, rental receivables and equipment leasing receivables. Additionally, Sebi may notify other types of debt or receivables from time to time. No other debt or receivable (including unlisted debt securities) will be permitted to be an underlying for an SDI.
Rights of investors: Rights of investors in an SDI shall not be varied without their consent.
SCORES: The entity issuing the listed SDIs is required to be registered on the SCORES Platform.
Comments on this consultation paper may be sent online at this link by November 16, 2024.