Ministry of Finance determines various debt instruments and non-debt instruments

Oct 17, 2019 | by Avantis RegTech Legal Research Team

The Ministry of Finance on October 16, 2019, issues a Notification in order to determine certain instruments as debt instruments and non-debt instruments.

The following instruments may be called as debt instruments, namely:

(i) Government bonds; 

(ii) corporate bonds; 

(iii) all tranches of securitisation structure which are not equity tranche; 

(iv) borrowings by Indian firms through loans; 

(v) depository receipts whose underlying securities are debt securities.

The followings instruments may be considered as non-debt instruments, namely:

(i) all investments in equity in incorporated entities (public, private, listed and unlisted); 

(ii) capital participation in Limited Liability Partnerships (LLPs); 

(iii) all instruments of investment as recognized in the FDI policy as notified from time to time; 

(iv) investment in units of Alternative Investment Funds (AIFs) and Real Estate Investment Trust (REITs) and Infrastructure Investment Trusts (InVITs); 

(v) investment in units of mutual funds and Exchange-Traded Fund (ETFs) which invest more than fifty per cent in equity; 

(vi) the junior-most layer (i.e. equity tranche) of securitisation structure; 

(vii) acquisition, sale or dealing directly in immovable property; 

(viii) contribution to trusts; 

(ix) depository receipts issued against equity instruments.

All other instruments shall be deemed as debt instruments.

[Notification No. S.O. 3722(E)]


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