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Fund Raising by Large Corporates upto 25% of their Incremental Borrowings in an FY by Issuing Debt Securities: Extending the Compliance Period

By - King Stubb & Kasiva on April 20, 2023

According to Chapter XII of the NCS Operational Circular[1], it is compulsory for large corporates to raise at least 25% of their incremental borrowings in one financial year by issuing debt securities. This requirement has to be fulfilled over a contiguous block period of 2 years, starting from FY 2021-22.

Recently, via circular dated 31st March 2023[2], upon receiving multiple representations from multiple participants in the market, SEBI has decided to extend the compliance period to a contiguous block of 3 years, as explained in further detail below.

Understanding the Amendments Made

SEBI has issued this circular while exercising its powers under Section 11(1)[3] of the SEBI Act, 1992, read with Regulation 55(1)[4] of the SEBI Regulations, 2021. The purpose of the circular and the availability for an extension of the compliance period is to protect the interests of investors in securities while also encouraging the expansion and regulation of the securities market.

From the requirement of the contiguous block period of 2 years within which large corporates have to meet the mandatory requirement of raising at least 25% of incremental borrowings in a financial year by debt securities, it has now been extended to a contiguous block period of 3 years. This circular has amended the provisions of Para 2.2 (c) and 2.2. (d) of Chapter XII of the NCS Circular.

Directions to Stock Exchange(s)

The Stock Exchange(s) have been directed to:

  • Notify the provisions of this circular to the Stock Brokers and disseminate the provisions on their websites; and
  • Incorporate necessary amendments and changes in the relevant bye-laws, rules, and regulations for proper and uniform communication and implementation.


SEBI has made a positive move by extending the compliance period for large firms to achieve the legal requirement of generating at least 25% of their incremental borrowings in a single financial year through the issuance of debt instruments from a two-year block period to a three-year block period. This will provide large corporations more time to plan and execute their fundraising campaigns, lessening the regulatory burden and allowing for a more seamless transition to the new standards. It will also encourage the issuance of more debt securities, increasing market depth and liquidity to the benefit of both investors and issuers. The instructions to stock exchanges to declare and disseminate the provisions of this circular, as well as include any necessary amendments, would enable effective and uniform communication and execution, strengthening the provision’s positive impact.



[3] Section 11(1), Securities and Exchange Board of India Act, 1992.

[4] Regulation 55(1), SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021.

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