FinMin turns down Sebi's plan to do away with debenture redemption reserve

Sebi proposed to the Department of Economic Affairs (DEA) last month that the DRR rule be reviewed, saying it was not favourable for the development of the corporate bond market

The finance ministry has rejected the Securities and Exchange Board of India’s (Sebi’s) proposal to do away with the requirement of the debenture redemption reserve (DRR) — a provision mandating both listed and unlisted companies to set aside 25 per cent of their profits for protection of bond investors in case of a default. Financial institutions such as banks and non-banking financial companies are, however, exempted from this requirement if funds are raised through a private placement. 

The markets regulator proposed to the