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For better transparency, issuers are now required to disclose long-term and unaccepted credit ratings in the offer document. This information helps investors make informed decisions about the risks associated with the investment, said market participants.
‘The aim is to bring more discipline among the issuers,’ said Ajay Manglunia, Managing Director and Head (Institutional Fixed Income), JM Financial. ‘Now there are timelines and discipline with respect to utilization which was not really there. They’ll have to be more sensible about why they are raising the fund,’ he added.
The settlement period was capped at T+4. This means that the transactions need to be settled within four days from the trade date. Individuals and Hindu Undivided Families (HUF) were restricted to investing a maximum of 25 per cent of their total income. The guidelines specify that redemptions (repayment of the invested amount) need to be made before 3 pm on the maturity date.
‘CP issuances are on the rise, so they are being a little cautious, apart from that there shouldn’t be any major impact,’ said Venkatakrishnan Srinivasan, Founder and Managing Partner of Rockfort Fincap LLP.
Companies and financial institutions raised Rs 1.1 trillion through CPs in December, as compared to Rs 1 trillion in November. In December, non-banking finance companies raised a total of Rs 69,380 crore, a 26 per cent increase compared to the previous month. Meanwhile, manufacturing companies witnessed a 14 per cent decline in issuances, amounting to Rs 33,690 crore during the same period. Housing finance companies accounted for the remaining Rs 8,200 crore mobilized during the period.
First Published: Jan 04 2024 | 7:01 PM IST
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