The Reserve Bank (“RBI”)
allowed foreign investors to buy bonds that are either fully or partially under
default in repayment and raised the maturity period of such NCDs/bonds to three
years and more.
As per the earlier rules,
investments by Foreign Portfolio Investors (“FPI”) in NCDs/bonds were required
to be made in securities with a minimum residual maturity of 3 years. The
revised maturity period of such NCDs/bonds, restructured based on negotiations
with the issuing Indian company, should be 3 years or more. The proposed move is expected to provide
relief into the country's distressed debt market.
Further, RBI Claried that the
FPI which propose to acquire such NCDs/bonds under default should disclose to
the Debenture Trustees the terms of their offer to the existing debenture
holders/beneficial owners from whom they are acquiring.
Such investment should be
within the overall limit prescribed for corporate debt from time to time, which
is at Rs 2.44 lakh crore currently.
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