CONSULTATION PAPER DEPARTMENT OF DEBT AND HYBRID SECURITIES

 

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Sebi has released a Consultation paper on expanding the scope of the Sustainable Finance framework in the Indian securities market Click here to provide your comments.

CONSULTATION PAPER
DEPARTMENT OF DEBT AND HYBRID SECURITIES –POD I

OBJECTIVE
1.1.The objective  of  this consultation  paper is  to  seek  comments, views and suggestions from the public on the proposals related to expanding the scope of sustainable finance framework in the Indian securities market.

1.2.The Hon’ble Finance Minister  in  the  budget  announcements  for  FY  2023-24, inter-alia,made an announcement to simplify,ease and reduce the cost of compliance for participants in the financial sector through a consultative approach.

1.3. Accordingly, to align the process of review with the budget  announcement, a working  group  for review of compliance requirements under SEBI  (Issue  and Listing   of   Non-Convertible   Securities)   Regulations,  2021(hereinafter ‘NCS Regulations’) was formed, which recommended certain measures  to promote the ease of doing business for issuance of non-convertible securities.

1.4. One of the recommendations of the working group was to redefine “green debt security” as “sustainability-linked security” as sustainability-linked security would cover a wider spectrum of sustainable finance instruments whereas green debt securities  appear  to only  reflect  the  instruments  related  to  environmental sustainability.

1.5. Further, SEBI is in receipt of representation from market participants including Confederation  of  Indian  Industry  (CII) to  expand the  scope  of  regulatory framework pertaining to sustainable finance to Include social Bonds, Sustainable Bonds  and  Sustainability-linked  Bonds in addition  to  existing Green  Debt Securities as a mode of raising sustainable finance,in line with global practices.

1.6. it is   also   noteworthy   that   the  Hon’ble  Finance  Minister  in  the  budget announcements for FY 2024-25, inter-alia mentioned that taxonomy for climate finance  for  enhancing  the  availability  of  capital  for  climate  adaptation  and mitigation  will  be developed.

1.7. Building on all these feedback and developments, it is proposed to provide for a framework for Social Bonds, Sustainable Bonds and Sustainability Linked Bonds,Further, it is also proposed to introduce the concept of Sustainable Securitised Debt Instruments.

1.8.The detailed proposals and consultation matters are mentioned in Paragraph 3 to 5 of this consultation Paper.

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