The government on Monday
removed the requirement of 'Debenture Redemption Reserve' (DRR) for
listed companies, non-banking financial companies (NBFCs) and housing
finance companies (HFCs).
A statement by the Corporate Affairs
Ministry said that the decision has been taken in pursuance of the
budget announcements for 2019-20 by Finance and Corporate Affairs
Minister Nirmala Sitharaman and the government's objectives of providing
greater "ease of doing business" to companies in the country, as part
of its 100 Days Action Plan.
"The Ministry of Corporate Affairs
has amended the Companies (Share Capital and Debentures) Rules by
removing Debenture Redemption Reserve requirement for Listed Companies,
NCFCs and HFCs," it said.
Through the amendments, the provisions
relating to creation of DRR have been revised with the objective of
"removing the requirement for creation of a DRR of 25 per cent of the
value of outstanding debentures in respect of listed companies, NBFCs
registered with the RBI and for HFCs registered with National Housing
Bank (NHB) both for public issue as well as private placements," said
The amendment would also aims to reduce DRR for
unlisted companies from the present level of 25 per cent to 10 per cent
of the outstanding debentures.
Earlier, listed companies had to
create a DRR for both public issue as well as private placement of
debentures, while NBFCs and HFCs had to create DRR only when they opted
for public issue of debentures.
"It (the latest amendment) is
aimed at creating a level-playing field between NBFCs, HFCs and listed
companies on the one hand and also between them and Banking Companies
& All India Financial Institutions on the other, which are already
exempted from DRR," it said.