Secured debentures for up to 30 years to raise funds for the infrastructure sector
The Modi government wants to provide all the facilities to the infrastructure sector and they have allowed the infrastructure finance companies to issue secured debentures with a tenure of up to 30 years. This move is expected to help in raising long-term funds for the sector. Besides, infrastructure debt fund non-banking financial companies (ID-NBFCs) have been allowed to issue secured debentures for up to 30 years.
The ministry of corporate affairs mentioned in a statement on Thursday that all these moves are done to give a boost to the ailing infrastructure sector. The housing finance companies have been allowed relaxed terms for maintaining debenture redemption reserve on lines similar to NBFCs registered with RBI (Reserve Bank of India).
A debenture redemption reserve is an account that can only be utilized to redeem debentures. As per the 12th Five-Year Plan document, India is projected to require investments of about $1 trillion in infrastructure during 2012-17. This amount will be used to improve roadways, transport, elevated highways and many more structures and services.
This move was welcomed by the financial institutions and infrastructure sector. The government also clarified that the companies can appoint an independent merchant banker, registered with market regulator SEBI, to prepare valuation reports required before making a preferential allotment of shares. Now the companies are waiting to make use of this move to raise long-term funds. The government also allowed the firms to engage an independent chartered accountant with a minimum experience of 10 years to prepare the valuation reports.
Source- Financial Chronicle
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