Regulation by circulars?

The recent semi-public exchanges between Sebi and DFS raise several questions about the legislative function of regulators that need careful consideration

Topics
SEBI | Additional Tier 1 bond | Perpetual bonds

K P Krishnan 

K P Krishnan

In March 2020, a private bank wrote off Additional Tier 1 (AT-1) bonds worth Rs 8,415 crore, based on a scheme of reconstruction approved by the Reserve Bank of India (RBI). This created a mini-crisis in the bond market.

While some bondholders challenged this write-off in court, the Madras High Court upheld it. On March 11, 2021, the Securities and Exchange Board of India (Sebi) issued a circular instructing mutual funds to value perpetual bonds assuming their maturity was 100 years on the issue date. It also required that no mutual fund can own over 10 per cent of such securities from a ...

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First Published: Thu, March 25 2021. 23:27 IST
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