Banks are allowed to enter Ready Forward Contracts in Corporate Debt Securities

RBI/2014–15/595 FMRD.DIRD.08/14.03.002/2014–15

May 14, 2015

A ref­er­ence is invit­ed to our cir­cu­lar FMRD.DIRD.04/14.03.002/2014–15 dat­ed Feb­ru­ary 3, 2015 enclos­ing the Repo in Cor­po­rate Debt Secu­ri­ties (Reserve Bank) Direc­tions, 2015. As indi­cat­ed under para­graph 4 of the Direc­tions, the fol­low­ing enti­ties are eli­gi­ble to enter into ready for­ward con­tracts in cor­po­rate debt securities:

i. Any sched­uled com­mer­cial bank exclud­ing RRBs and LABs;

ii. Any Pri­ma­ry Deal­er autho­rised by the Reserve Bank of India;

iii. Any non-bank­ing finan­cial com­pa­ny reg­is­tered with the Reserve Bank of India (oth­er than Gov­ern­ment com­pa­nies as defined in sub-sec­tion (45) of sec­tion 2 of the Com­pa­nies Act, 2013);

iv. All-India Finan­cial Insti­tu­tions, name­ly, Exim Bank, NABARD, NHB and SIDBI;

v. India Infra­struc­ture Finance Com­pa­ny Lim­it­ed (IIFCL);

vi. Any sched­uled urban coop­er­a­tive bank sub­ject to adher­ence to con­di­tions pre­scribed by Reserve Bank of India;

vii. Oth­er reg­u­lat­ed enti­ties, sub­ject to the approval of the reg­u­la­tors con­cerned, viz.,

1. Any mutu­al fund reg­is­tered with the Secu­ri­ties and Exchange Board of India;
2. Any hous­ing finance com­pa­ny reg­is­tered with the Nation­al Hous­ing Bank; and
3. Any insur­ance com­pa­ny reg­is­tered with the Insur­ance Reg­u­la­to­ry and Devel­op­ment Authority

viii. Any oth­er enti­ty specif­i­cal­ly per­mit­ted by the Reserve Bank.

2. It has now been decid­ed to per­mit NBFCs reg­is­tered with RBI includ­ing Gov­ern­ment com­pa­nies as defined in sub-sec­tion (45) of sec­tion 2 of the Com­pa­nies Act, 2013 which adhere to the pru­den­tial norms pre­scribed for NBFCs by the Depart­ment of Non-Bank­ing Reg­u­la­tion, Reserve Bank of India, to under­take ready for­ward con­tracts in cor­po­rate debt securities.

3. The direc­tions (Repo in Cor­po­rate Debt Secu­ri­ties (Amend­ment) Direc­tions 2015) issued in this regard vide FMRD.DIRD.07/14.03.002/2014–15 dat­ed May 14, 2015 are enclosed. The mod­i­fi­ca­tions shall be deemed to be effec­tive from May 14, 2015.

Yours faith­ful­ly,

(R. Sub­ra­man­ian)
Chief Gen­er­al Manager

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RESERVE BANK OF INDIA
FINANCIAL MARKETS REGULATION DEPARTMENT
23rd FLOOR CENTRAL OFFICE
FORT MUMBAI 400 001

Mum­bai, May 14, 2015

Repo in Cor­po­rate Debt Secu­ri­ties (Amend­ment) Direc­tions, 2015

In exer­cise of the pow­ers con­ferred by Sec­tion 45 W of the Reserve Bank of India Act, 1934 and in par­tial mod­i­fi­ca­tion of the noti­fi­ca­tion No FMRD.DIRD.03/14.03.002/2014–15 dat­ed Feb­ru­ary 3, 2015, the Reserve Bank here­by makes the fol­low­ing amend­ments in the Repo in Cor­po­rate Debt Secu­ri­ties (Reserve Bank) Direc­tions, 2015 dat­ed Feb­ru­ary 3, 2015 (here­inafter referred to as the said Direc­tions) namely:

1. Short title and commencement:

1. These direc­tions may be called the Repo in Cor­po­rate Debt Secu­ri­ties (Amend­ment) Direc­tions, 2015
2. They shall be deemed to come into force with effect from the 14th day of May, 2015.

2. In para­graph 4, for item ©, the fol­low­ing shall be sub­sti­tut­ed, namely:

“© Any non-bank­ing finan­cial com­pa­ny reg­is­tered with the Reserve Bank of India, includ­ing Gov­ern­ment com­pa­nies as defined in sub-sec­tion (45) of sec­tion 2 of the Com­pa­nies Act, 2013, which adhere to the pru­den­tial norms for NBFCs pre­scribed by Depart­ment of Non-Bank­ing Reg­u­la­tion, Reserve Bank of India from time to time”

(G. Pad­man­ab­han)
Exec­u­tive Director

Ref. FMRD.DIRD.07/14.03.002/2014–15