IFSCA likely to issue norms for listing CPs, CDs in GIFT City in 3 weeks

Regulations

The International Financial Services Centres Authority (IFSCA) is expected to bring in norms for the listing of commercial papers (CPs) and certificates of deposit (CDs) on the GIFT City in the next three weeks, sources have told Moneycontrol.

“So far, all comments have been received and the authority is now evaluating the suggestions. After this process, the final regulations will be out in the next three weeks,” one of the sources cited above said.

Earlier this month, IFSCA, which regulates financial products, services, and institutions at the GIFT City, released a consultation paper, seeking comments from stakeholders and the members of the general public on the listing norms for commercial papers and CDs on exchanges in the IFSC.

The deadline for sending comments was September 17.

The draft circular said the norms will attract foreign investors to these instruments, leading to the development of the market. They will also provide access to a larger and more diverse investor base. This broader reach can lead to greater demand for these products, potentially lowering the cost of borrowing for the issuer, it said.

Issuers must comply with the initial and continuous disclosure requirements of IFSCA. The increased transparency will build credibility and trust among investors.

The listing of CPs and CDs in the IFSC will be under the regulatory oversight of IFSCA, providing additional protection to investors, the discussion paper said.

Fundraising through CPs rose 22 percent year-on-year in August. Corporates preferred this route as bank loans become costlier amid the increase in the marginal cost of funds-based lending rates (MCLR).

CD issuances increased a healthy 44 percent on-year in August amid lagging deposit growth at banks and the rollover of some papers which were set to mature.

Banks raised Rs 82,020 crore through CDs in August, markedly higher than the Rs 57,170 crore in August 2023, information from Prime Database shows.

Similarly, businesses raised Rs 1.40 lakh crore in August compared to Rs 1.15 lakh crore in the year-ago period and Rs 1.05 lakh crore in the previous month.

The top five issuers – Reliance Retail Ventures, the National Bank for Agriculture & Rural Development (NABARD), Reliance Industries, Reliance Jio Infocomm and ICICI Securities – raised 30 percent of the overall funds.

Reliance Retail raised Rs 13,275 crore, NABARD Rs 9,700 crore, RIL Rs 7,000 crore, Jio Rs 5,825 crore and ICICI Securities Rs 5,685 crore, the data shows.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.