Regulated financial companies need not maintain 100% asset cover for issue of unsecured debt instruments

SEBI vide circular SEBI/IMD/DOF-1/BOND/Cir-1/2010 dated January 07, 2010 has amended the simplified listing agreement for debt securities. SEBI has stated that regulated financial sector entities need not maintain 100% asset cover (sufficient to discharge the principal amount at all times for the debt securities) in case of unsecured debt instruments issued by them. It should be noted that these unsecured debt instruments should be eligible for meeting the capital requirements of the financial sector entities (as specified by their respective regulators).

SEBI had in May, 2009 issued the simplified listing agreement for debt securities as a part of its efforts to rationalize the disclosure norms for listing of debt issuances. Later, it was amended in November, 2009.

A copy of the circular is available here.