Current Affairs

Govt removed DRR for HFCs, NBFCs and Listed Firms

Current context: The Government has removed the Debenture Reserve Requirement (DRR) for issuance of debentures by HFCs, NBFCs and listed firms to reduce the cost for raising capital.
Govt removed DRR for HFCs, NBFCs and Listed Firms 
  • Earlier, the entities raising money had to create Debenture Redemption reserves under the companies law.
  • Companies (Share Capital & Debentures) Rules have been amended by the ministry to effect the changes.
  • The finance ministry has removed the requirement for a DRR of 25 per cent of the value of outstanding debentures issued by NBFCs, listed firms and Housing Finance Companies (HFCs)
  • The changes would be applicable for both public issues as well as private placements.
  • For unlisted companies, the DRR requirement has been reduced from 25% to 10% of the outstanding debentures.
  • The government has taken the measure to reduce the cost of capital raised by issuing debentures by the companies and is expected to deepen the bond market.
  • Earlier, the NBFCs and HFCs had to create DRR when they opted for public issue of debentures and the listed companies had to create a DRR for both private as well as public placements of debentures.

Question: 

Q.1 Currently the Debenture Reserve Requirement (DRR) for issuance of debentures by HFCs, NBFCs and listed firms is?
a. 25%
b. 10%
c. 30%
d. None
Govt removed DRR for HFCs, NBFCs and Listed Firms Govt removed DRR for HFCs, NBFCs and Listed Firms Reviewed by Neha Verma on August 20, 2019 Rating: 5

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