Debt Instruments and Related Investments
(a) Listed (or proposed to be listed in case of fresh issue) debt
securities issued by bodies corporate, including banks and public
financial institutions (Public Financial Institutions’ as defined under
Section 2 of the Companies Act, 2013), which have a minimum residual
maturity period of three years from the date of investment.
(b) Basel III Tier-1 bonds issued by scheduled commercial banks under RBI Guidelines:
Provided that in case of initial offering of the bonds the
investment shall be made only in such Tier-I bonds which are proposed to
be listed.
Provided further that investment shall be made in such bonds of a
scheduled commercial bank from the secondary market only if such Tier I
bonds are listed.
Total portfolio invested in this sub-category, at any time, shall not be more than 2% of the total portfolio of the fund.
No investment in this sub-category in initial offerings shall
exceed 20% of the initial offering. Further, at any point of time, the
aggregate value of Tier I bonds of any particular bank held by the fund
shall not exceed 20% of such bonds issued by that Bank
(c) Rupee Bonds having an outstanding maturity of at least 3 years
issued by institutions of the International Bank for Reconstruction and
Development, International Finance Corporation and Asian Development
Bank.
(d) Term Deposit receipts of not less than one year duration issued
by scheduled commercial banks, which satisfy the following conditions
on the basis of published annual report(s) for the most recent years, as
required to have been published by them under law:
(i) having declared profit in the immediately preceding three financial years;
(ii) maintaining a minimum Capital to Risk Weighted Assets Ratio of
9%, or mandated by prevailing RBI norms, whichever is higher;
(iii) having net non-performing assets of not more than 4% of the net advances;
(iv) having a minimum net worth of not less than Rs. 200 crores.
(e) Units of Debt Mutual Funds as regulated by Securities and Exchange
Board of India:
(f) The following infrastructure related debt instruments:
(i) Listed (or proposed to be listed in case of fresh issue) debt
securities issued by body corporates engaged mainly in the business of
development or operation and maintenance of infrastructure, or
development, construction or finance of low cost housing.
Further, this category shall also include securities issued by
Indian Railways or any of the body corporates in which it has majority
shareholding.
This category shall also include securities issued by any Authority
of the Government which is not a body corporate and· has been formed
mainly with the purpose of promoting development of infrastructure.
It is further clarified that any structural obligation undertaken
or letter of comfort issued by the Central Government, Indian Railways
or any Authority of the Central Government, for any security issued by a
body corporate engaged in the business of infrastructure, which
notwithstanding the terms in the letter of comfort or the obligation
undertaken, fails to enable its inclusion as security covered under
category (i) (b) above, shall be treated as an eligible security under
this sub-category.
(ii) Infrastructure and affordable housing Bonds issued by any
scheduled commercial bank, which meets the conditions specified in
(ii)(d) above.
(iii) Listed (or proposed to be listed in case of fresh issue)
securities issued by Infrastructure debt funds operating as a
Non-Banking Financial Company and regulated by Reserve Bank of India.
(iv) Listed (or proposed to be listed in case of fresh issue) units
issued by Infrastructure Debt Funds operating as a Mutual Fund and
regulated by Securities and Exchange Board of India.
It is clarified that, barring exceptions mentioned above, for the
purpose of this sub-category (f), a sector shall be treated as part of
infrastructure as per Government of India’s harmonized master-list of
infrastructure sub-sectors:
Provided that the investment under sub-categories (a), (b) and (f)
(i) to (iv) of this category No. (ii) shall be made only in such
securities which have minimum AA rating or equivalent in the applicable
rating scale from at least two credit rating agencies registered with
Securities and Exchange Board of India under Securities and Exchange
Board of India (Credit Rating Agency) Regulation, 1999. Provided further
that in case of the sub-category (f) (iii) the ratings shall relate to
the Non-Banking Financial Company and for the subcategory (f) (iv) the
ratings shall relate to the investment in eligible securities rated
above investment grade of the scheme of the fund.
Provided further that if the securities/entities have been rated by
more than two rating agencies, the two lowest of all the ratings shall
be considered.
Provided further that investments under this category requiring a
minimum AA rating, as specified above, shall be permissible in
securities having investment grade rating below AA in case the risk of
default for such securities is fully covered with Credit Default Swaps
(CDSs) issued under Guidelines of the Reserve Bank of India and
purchased along with the underlying securities. Purchase amount of such
Swaps shall be considered to be investment made under this category.
For sub-category (c), a single rating of AA or above by a domestic or international rating agency will be acceptable.
It is clarified that debt securities covered under category (i) (b) above are excluded from this category (ii).
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