What changed
RBI deferred the operationalization of the minimum time gap between two successive privately placed NCD issuances, originally introduced in the June 27, 2013 circular. The central bank also exempted Primary Dealers from the circular's provisions, Core Investment Companies from specific restrictions, and subordinated debt from paragraph B of the annex. The definition of private placement was updated to reference RBI-specified subscriber limits.
What it means for you
NBFCs get temporary relief from immediate compliance with the gap requirement, allowing smoother ALM transition. However, they must formalize resource planning with board approval by September 30, 2013. The exemptions reduce compliance burden for Primary Dealers and Core Investment Companies, while subordinated debt remains outside the new NCD rules.
What you must do
- Ensure board-approved resource planning policy is in place by September 30, 2013, covering planning horizon and placement periodicity.
- Review your NCD issuance schedule to align with the eventual minimum gap rule once RBI decides on it.
- Confirm that your NBFC type (PD, CIC, or others) qualifies for any exemptions and adjust compliance accordingly.
- Update internal definitions of private placement to match the revised RBI specification.
Who it affects
All NBFCs (including PDs), Primary Dealers, Core Investment Companies, NBFCs issuing subordinated debt
Is the minimum gap rule for NCD private placements now in effect?
No, RBI has decided not to operationalize the minimum gap requirement immediately. A decision on the appropriate time gap will be taken later.
What must NBFCs do by September 30, 2013?
NBFCs must put in place a board-approved policy for resource planning that covers the planning horizon and periodicity of private placements.
Are Primary Dealers subject to the same NCD restrictions?
No, the provisions of the June 27, 2013 circular do not apply to Primary Dealers, given their G-Sec market obligations.