Sebi allows ADB, IFC, others to raise debt

Indian markets may soon witness multilateral agencies like Asian Development Bank (ADB) and International Finance Corporation (IFC) raising ...

Indian markets may soon witness multilateral agencies like Asian Development Bank (ADB) and International Finance Corporation (IFC) raising debt capital (like bonds and debentures, etc) and subsequently listing and trading of those debt instruments on domestic stock exchanges.

“As part of our efforts to continuously innovate and provide better environment to market participants, we have been permitted by the Ministry of Finance to allow ADB and IFC, Washington, multilateral financial institutions, to raise debt capital in the Indian markets. The rupee-denominated debt instruments will be listed and traded on the wholesale debt market (WDM) segment of the stock exchanges,” Sebi chairman G.N. Bajpai said on the sidelines of the foundation-stone laying ceremony of Sebi Bhavan here on Thursday. These agencies were earlier bringing funds from abroad.

The regulator is also contemplating allowing companies based in the South Asian Association of Regional Co-operation (SAARC) region to follow the path of multilateral agencies in raising capital from the Indian markets. This means a company registered and listed in Bangladesh or Sri Lanka will be allowed to raise capital from India and list them on Indian stock exchanges. “The amount raised in the Indian markets will be allowed to be disbursed only in the local market and for local projects,” Bajpai said.

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Bajpai said, in principle, a decision has been taken for these agencies to raise resources but formally they will have to make an application to Sebi and “we will extend them all the needed support.”

Sebi will consider necessary relaxation required to them as they do not operate under the normal corporate structure and may be given some leeway with respect to independent directors and other provisions which are a must for corporates. He also said the details for the proposal to allow companies from the SAARC region to tap the Indian markets will be worked out at a later stage.

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