SEBI to expand list of QIB entities in debt market

Market regulator SEBI has proposed to include 10 different categories of entities including multi-State co-operatives with ₹500-crore networth, NBFCs, housing finance companies, pension funds, small finance banks, reinsurers and refinancing agencies such as MUDRA under the definition of qualified institutional investors for investment in debt securities and further develop the debt market.  

The other entities that would be recognised as QIB in debt market include regulatory authorities, autonomous bodies, authorities, boards or Commissions or agencies, authorities, organisations or entities established, owned or controlled by the Central government or a State government and SEBI-regulated entities with net worth of over ₹500 crore.

This apart, educational institutions, including universities or higher educational institutions, or funds or endowments of universities or higher educational institutions recognised by State governments or Central government and Urban local body, municipality or any statutory body or board or corporation, authority, trust or agency established, special purpose vehicle notified by the Central government or State government would also be recognised.

SEBI may also specify a minimum amount of investible surplus and furnish the same to the stock exchange prior to commencing investments as a QIB.

Representations to SEBI

SEBI said it has been receiving representations that the definition of the term ‘QIB’ be expanded in order to increase the potential investor base for issuers of debt securities and for further developing the debt markets.

Public can send in their comments on the subject to SEBI by May 29.

QIBs are large, sophisticated and informed investors who are considered suitable for making investments in the capital markets and have expertise in evaluating investment opportunities and in managing risks. The sophistication in such investors is reflected in their ability to evaluate investments, undertake risk management and carry out due diligence.

Many investors with large corpus, financial sophistication and the ability to evaluate investment opportunities have emerged. There are also existing entities which could be considered being recognised as QIBs for the same reason. Such investors can serve to provide required funds to issuers through subscription to debt securities/ non-convertible securities and enhancing the depth in the bond market, said SEBI.