With the purpose of deepening the access to the bond market and with a view to operationalise the Union Budget announcement for 2018-19, SEBI issued a circular on November 26, 2018 (‘Circular’), mandating ‘Large Corporates’ to meet one-fourth of their financing needs from the debt market. ‘Large Corporates’ refers to listed entities (except Scheduled Commercial Banks), which as on last day of the financial year (‘FY’) have:

(i)      specified securities / debt securities / non-convertible redeemable preference shares listed on recognised stock exchanges in terms of the Listing Regulations;

(ii)     an outstanding long term borrowing (with original maturity of more than one year, and excluding external commercial borrowings and inter-corporate borrowings between a parent and subsidiaries) of INR 100 crores (approximately US$ 14 million) or above; and

(iii)    a credit rating of “AA and above”, in accordance with specified criteria.

A Large Corporate is required to raise not less than 25% of its incremental borrowings, during the FY subsequent to the FY in which it is identified as a Large Corporate, by way of the issuance of debt securities, as defined under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008. For FY 2020 and FY 2021, this requirement will be required to be met on an annual basis and from FY 2022 onwards, the requirement will be required to be met over a continuous block of two years. The Circular also requires Large Corporates to make the stock exchange disclosures (certified by both the Company Secretary and Chief Financial Officer) with respect to identification as a Large Corporate and the details of the incremental borrowings made during the FY.

The Circular will become effective from April 1, 2019 (except for those entities which follow the calendar year as their financial year, in which case the Circular shall become applicable from January 1, 2020).