SEBI allows NBFCs and HFCs to invest in Security Receipts (SRs) issued by Asset Reconstruction Companies (ARCs).

Banking & Finance

The Securities and Exchange Board of India (SEBI) has allowed all Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs), to invest in Security Receipts (SRs) issued by Asset Reconstruction Companies (ARCs).


      - All NBFCs, including HFCs, regulated by the Reserve Bank of India (RBI), are now considered qualified buyers. This means they can invest in SRs under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), subject to certain conditions.

      - This important change by SEBI aims to encourage investment in the bad loans sector and expand the pool of investors who can buy SRs from ARCs, which will improve liquidity in the distressed asset market.

     

Main Point :-   (i) SEBI has extended the deadline for reporting differential rights issued by Alternative Investment Funds (AIFs) to March 31, 2025 (previously it was February 28, 2025). This extension followed requests from the industry for more time to comply.

      (ii) This change comes from amendments to the SEBI (Alternative Investment Funds) Regulations, 2012, which were notified on November 18, 2024. The goal is to ensure that investors receive their rights and share of proceeds in proportion to their investments within a scheme, while maintaining equal treatment (pari-passu).


About SEBI

Chairman: Tuhin Kanta Pandey
Headquarter : Mumbai
          ____________________________