Articles and Updates

• Sawant Singh and Aditya Bhargava - 13-11-2019

The government has often voiced its desire to shift Indian borrowers to the capital markets from banks that are reeling from the burden of non-performing assets. Not only are capital markets better placed to price and absorb risk in varied sectors, but the inherent tradability of a debt instrument also makes it an attractive option for entities whose role in the capital markets is limited to temporary placement of treasury funds until they need to be used. This ensures greater availability of funds for borrowers.

• Sawant Singh and Aditya Bhargava - 13-11-2019

To reduce the burden on banks for financing infrastructure projects, and to promote the use of the corporate bond market for this purpose, the Reserve Bank of India (RBI) permitted banks to provide partial credit enhancements (PCEs) to corporate bonds in 2015. PCEs were intended to enhance the credit rating of bonds, thereby encouraging long-term investors such as insurance funds and pension funds to invest in such bonds.

• Sawant Singh and Aditya Bhargava - 13-11-2019

The regulatory environment for investment in corporate debt by foreign portfolio investors (FPIs) has been turbulent with sweeping changes introduced by the Reserve Bank of India (RBI) in April 2018, followed by other changes introduced on 15 June by both the RBI and the Securities and Exchange Board of India (SEBI). Unlike global financial regulatory rule-making practices, these changes were introduced without the issuance of consultation papers seeking feedback of market participants. These developments, and their manner of introduction, created anxiety among issuers, FPIs and other market participants.

• Sawant Singh and Aditya Bhargava - 12-11-2019

The foreign portfolio investor (FPI) framework introduced in 2014 was welcomed as a prime example of regulatory streamlining. However, the framework has presented challenges, particularly for investments in Indian corporate debt. Until recently, corporate debt investments by FPIs were regulated by a series of circulars issued by the Reserve Bank of India (RBI) in 2015. The 2015 circulars were recast by circulars issued by the RBI on 27 April and 1 May.

• Sawant Singh and Aditya Bhargava - 12-11-2019

Along with sweeping changes in federal and state taxation, the goods and services tax (GST) introduced in 2017 also impacted how business was done, particularly in the financial services sector. With the intent of ensuring "smooth roll-out" of GST, the GST Council constituted 18 sectoral working groups to consider issues and problems relating to 18 sectors in June last year. The objectives of these groups included interacting with and examining representations from trade and industry bodies, highlighting specific issues on the application of GST, and providing sector-specific guidance. On 3 June, the Central Board of Indirect Taxes and Customs (CBIC) issued a compilation of 91 "frequently asked questions" (FAQs) on the application of GST to the financial services sector.