New Delhi, February 27, 2017

In a bid to deepen capital markets, Sebi today notified new norms allowing Foreign Portfolio Investors (FPIs) to invest in unlisted corporate debt securities and securitised debt instruments.

The decision follows the board of Securities and Exchange Board of India (Sebi) approving a proposal last November in this regard.

In a notification, the regulator said it has amended FPI regulations to allow overseas investors to invest in unlisted non-convertible debentures and securities debt instruments.

The Reserve Bank too relaxed its rules recently for allowing such investments by FPIs.

Earlier, investment in unlisted debt securities was permitted only in the case of companies in the infrastructure sector. Further, investment by FPIs in securitised debt instruments was not permitted.

The Sebi move is aimed at enhancing investor base in unlisted debt securities and securitised debt instruments.

Securitised debt instruments include certificate or instrument issued by a special purpose vehicle (SPV) set up for securitisation of asset with banks and other financial institutions.

The permitted avenues also include certificate or instrument issued and listed in compliance of Sebi norms.

FPIs have been permitted to invest in the unlisted corporate debt securities in the form of non-convertible debentures (NCDs) or bonds issued by an Indian public or private company.

Last month, Sebi had notified rules permitting well-regulated FPIs to directly trade in corporate bonds, without going through any broker or other intermediary.

[The Business Standard]