India's markets regulator to widen definition of qualified buyers for bonds

INDIA’S markets regulator on Tuesday (May 16) proposed to widen the definition of “qualified institutional buyer”, allowing more market participants to invest in debt securities.

The Securities and Exchange Board of India (Sebi), in a consultation paper, said that institutes such as cooperatives, housing finance companies, non-bank financial companies, refinancing agencies, pension funds, re-insurers, small finance banks and universities should be included as qualified buyers.

These entities would need to have the necessary expertise and investible surplus, Sebi said.

Currently, Indian laws do not clearly define who can be qualified buyers for bonds, with market participants relying on the definition laid down for equity investments, which include banks, mutual funds and insurance companies.

According to the regulator, the proposed widening of qualified buyers could increase the supply of funds to the issuers of bonds, aid better price discovery and reduce the cost of fundraising.

The regulator has invited comments from stakeholders till May 29. REUTERS