The Securities and Exchange Board of India (Sebi) on Tuesday has released a consultation paper, seeking comments from public to expand and broaden the definition of Qualified Institutional Buyer (QIB), especially for investments into debt securities. The regulator believes that there is a need to increase the potential investor base for issuers of debt securities and for further developing the debt markets.

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According to Sebi, multistate cooperatives with net worth of more than Rs 500 crore should be classified as QIBs. Besides, Non-banking financial companies (NBFCs), housing finance companies regulated by the Reserve Bank of India (RBI), small finance banks, reinsurance companies, pension funds, and refinancing agencies such as MUDRA should be included in the category of QIB.

The capital market regulator has sought comments from the public on the proposals made above by May 29.

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Expanding the definition of QIBs for investing into debt securities will serve to broaden the types, class and categories of investors, and further enhance access to investment opportunities within the primary issuance at EBP and help in leveling the playing field within the bond market, Sebi said in its consultation paper. The regulator also noted that many investors, with large corpus, financial sophistication and ability to evaluate investment opportunities have emerged. There are also existing entities which could be considered being recognized as QIBs for the same reason.

Additionally, Sebi also felt the need to consider parity for certain class or category of Indian investors with Foreign Portfolio Investors, who are included in the present definition of QIB.

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(Edited by : Anshul)

First Published:May 17, 2023 11:56 AM IST