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.
a. 25%
b. 10%
c. 30%
d. None
- 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
