RBI may ‘take a bit of a chance’ on FII investment in short-term corp debthttps://indianexpress.com/article/business/business-others/rbi-may-take-a-bit-of-a-chance-on-fii-investment-in-short-term-corp-debt/

RBI may ‘take a bit of a chance’ on FII investment in short-term corp debt

On April 1, the RBI also barred FIIs from buying government debt with less than one-year maturity to encourage longer-term fund inflows.

Hinting at a relaxation in the corporate bond investment norms, Reserve Bank Deputy Governor HR Khan on Tuesday said the RBI could “take a bit of a chance” in terms of its current restrictions on foreign investors from buying corporate debt of less than three years in residual maturity.

However, Khan was quick to add that no view has been taken so far and that the central bank is looking at the matter as foreign institutional investors (FIIs) have been calling for a re-look at the ban on buying short-term maturity corporate bonds. In February, the government said it would prevent foreign institutional investors from buying corporate debt with less than three years in residual maturity, applying the same restriction currently in place for government bonds. On April 1, the RBI also barred FIIs from buying government debt with less than one-year maturity to encourage longer-term fund inflows and reduce the country’s dependence on short-term money, which is normally considered as hot money by the regulators.

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“The present curb is only on residual majority of short term corporate bonds and we will look at whether some of the areas we can see because corporate debt is slightly different from government securities, so we can take a little bit of chance and see which are the areas where we can do it,” he said while addressing an event organised by Ficci here.

“We need foreign investments, but we are not desperate that we open our gates to hot money. But certainly we will see that there is a vibrancy,” Khan said. When asked whether the RBI is looking at amending the residual maturity clause, he said, “we will look at it but no view has been taken so far.” He said framework for government bonds has already been laid down till 2018 and this framework will continue. “For corporate bonds we will see how these off-shore rupee bonds, known as the ‘masala bonds’, how the demand is.”

BRs to be mandatory for top 500 cos: Sebi chief

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Mumbai: The Securities and Exchange Board of India (Sebi) is planning to expand list of companies required to submit annual business responsibility report (BR) from 100 to 500 top corporates.

“As part of corporate governance efforts we are now looking at expanding this universe say from top 100 to top 500 companies to submit business responsibility reports,” Sebi chairman U K Sinha said here. “We hope to take a decision in this regard very soon,” he said at a Ficci conference on Indian capital markets.

The BRs are submitted by the companies along with annual reports and indicate, among others, the number of complaints related to child labour, forced labour, involuntary labour and sexual harassment during a financial year.

Sebi will soon issue norms allowing e-commerce platforms to sell mutual fund products, among other measures, to boost the MF industry. It is also planning to implement know-your-client (KYC) procedure online, to simplify the process for mutual fund investors and attract wider number of customers. On using the e-commerce platform, Sinha said the regulator has set up a committee under Nandan Nilekani which has had three rounds of meeting already to suggest ways for boosting MF industry. ENS