SEBI may allow FPIs to invest in unlisted NCDs

SEBI is attempting to further develop and strengthen the debt markets in India. FPI participation is encouraged by SEBI in debt instruments which will boost the volumes in the debt markets in India.  With an aim to further strengthen the participation of FPIs in India, SEBI is mulling to allow FPIs to participate in the unlisted NCDs according to media reports.

The norms might be relaxed and the moves may lead to increased inflows from the FPIs. In its constant endeavour to make the financial markets safe for the retail investors in India, SEBI is also planning to tighten the corporate governance rules on profit sharing agreements between promoters and private equity funds, intended towards safeguarding the interests of the minority shareholders in the markets.

There has been steady withdrawal of funds by the FPIs from the debt markets in India owing largely to the developments in the US markets, with bond yields firming up.

In order to strengthen the debt markets further and increase the volumes SEBI has allowed well-regulated FPIs to directly trade in corporate bonds without going through any brokers or other intermediaries.