"This would help reduce the cost of capital raised by companies
through issue of debentures and is expected to significantly deepen the bond market," the ministry said in a statement here.
Hitherto, listed companies had to create DRRs for both public issues and private placements of debentures, while NBFCs
had to create DRRs only when they opted for a public issue.
On the other hand, banking companies and all India financial institutions are already exempted from creating DRRs.
The MCA’s move is aimed at creating a level playing field for NBFCs, HFCs
and listed companies.
Rohit Raghavan, partner, L&L Partners, said the move will likely help improve liquidity, bring about a level playing field between bonds and loans, and deepen the bond market in the country. "There is no clarity on whether exempt issuers will still be required to maintain the unencumbered reserve of 15 per cent of the value of bonds maturing in a given year," he said.
Earlier, the Securities and Exchange Board of India (Sebi) had recommended reviewing the DRR norms.