Finance minister asks Sebi to initiate next-generation reforms

Sitharaman also asked the regulator to further deepen the corporate bond market and also develop green bond market.

Finance minister Nirmala Sitharaman on Tuesday asked capital markets regulator Sebi to prepare for any possible market turbulence in the wake of tapering by the US Federal Reserve, and also undertake “next-generation reforms” to ensure greater ease of doing business.

In her customary post-Budget address to the Sebi (Securities and Exchange Board of India) board, the minister highlighted the need to further slash the compliance burden of India Inc, reduce the cost of market intermediation and bolster investor-protection mechanism.

In December, the Federal Reserve announced plans to expedite the pace of tapering of its pandemic-era stimulus for the US economy and pencilled in at least three interest rate hikes in 2023, in a bid to cool inflation that was hovering around a four-decade high. It led to fears that emerging economies, including India, could see a flight of capital. However, the latest Economic Survey has already stated that it would a “taper without tantrum” for India this time on the back of strong macro-economic fundamentals and robust forex reserves that have remained above $630 billion for months now.

While appreciating the raft of steps taken by the regulator so far on various issues, Sitharaman also asked the regulator to further deepen the corporate bond market and also develop green bond market in light of rising focus on ESG (environment, social and governance) investments, according to a statement by the watchdog after its board meeting.

Sebi chairman Ajay Tyagi highlighted the “enhanced activity of fund raising through capital market to support the overarching objective of the Union Budget towards capital formation in the economy”, the regulator said.

The meeting was also attended by minister of state for finance Bhagwat Karad, finance secretary TV Somanathan, economic affairs secretary Ajay Seth, revenue secretary Tarun Bajaj, DIPAM secretary Tuhin Kanta Pandey, corporate affairs secretary Rajesh  Verma and chief economic advisor V Anantha Nageswaran, apart from senior Sebi officials.

Regulator tweaks AIF norms

Markets regulator Sebi said its board has also approved changes to Alternative Investment Fund (AIF) rules and decided to align the regulatory framework for ‘security cover’, disclosure of credit ratings and due diligence certificate.

It has now agreed to offer flexibility to Category-III AIFs to calculate the investment concentration rule based either on investable funds or net asset value of the fund, while investing in listed equity of an investee firm. This is tied to certain conditions. It has approved amen-dments to debenture trustee rules, norms pertaining to issue and listing of non-convertible securities and LODR (listing obligations and disclosure requirements) regulation, aimed at aligning the regulatory framework for ‘security cover’, disclosure of credit ratings and due diligence certificate.

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