Banking and Finance

In what appears to be another step towards increasing the efficacy of the insolvency resolution process in India, the Reserve Bank of India (RBI), further relaxed the regime on external commercial borrowings (ECBs) in India by way of a circular dated 7 February 2019 (New ECB Circular). The New ECB Circular comes in shortly after the RBI revamped the regime for ECBs on 16 January 2019 (Revised ECB Framework) under which it had substantially relaxed the provisions for eligible borrowers and recognised lenders.

Leasing of aircrafts is a prevalent market practice in the aviation industry, and all existing airline operators in India have currently leased a significant number of aircrafts in their fleet. In fact, a sizeable debt in the books of these operators is in connection with such leasehold arrangements.

The government and the regulators in tandem have introduced a slew of coordinated measures to reduce dependence on the banking system and strengthen the Indian corporate bond market.

The Securities and Exchange Board of India (SEBI) in its meeting held on 18 August 2018, besides reviewing the total expense ratio of the mutual fund schemes and agreeing to introduce united payment interface with ASBA facility for public issues, has also paved the way for further stimulating the bond market by removing the requirement of having  1% security deposit for public issue of debt securities and laying down the framework for enhanced market borrowings by large corporates through the bond route.

The Insolvency and Bankruptcy Board of India (IBBI) notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2018 (Amendment Regulations) on 4 July 2018 to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) for the third time this year.

Between 31 May to 1 June, the Securities and Exchange Board of India (SEBI) amended a number of securities regulations to provide certain dispensations for listed companies undergoing the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code 2016 (IBC).

The President of India promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance 2018 on 6 June 2018 (Ordinance) to amend the Insolvency and Bankruptcy Code 2016 (IBC). In the short history of around one and half years since the provisions relating to corporate insolvency resolution process under IBC came into force in December 2016, the Ordinance marks the second amendment to IBC.

One of the most significant legal reforms of the country in recent times has been the enactment of the Companies Act, 2013 (the 2013 Act) as this was a major step towards aligning Indian company law with the company laws prevalent globally. However, the 2013 Act faced multiple implementation challenges and various concerns were raised by industry stakeholders which led to further review and simplification of a few of the provisions of the 2013 Act.

Amidst growing investor appetite for Indian debt securities and increased government and corporate debt needs, the Foreign Portfolio Investment (FPI) route has been a dominant source of foreign funding. Liberalisation of the FPI route to allow investment in unlisted debt securities had further bolstered investments through this route. However, the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) have issued various circulars over the last couple of weeks