IDBI reworks debt mop-up programme

The Industrial Development Bank of India (IDBI) has revamped its debt borrowing programme as an effort to be in line with new norms announced jointly by the Securities Exchange Board of India (Sebi) - Reserve Bank of India (RBI) for the private placement market.

According to official sources, the institution has reduced the number of issues from 200-300 per year to 25-30 so as to bring down the listing fees bill.

As per the new norms, each issue has to be listed and listing fees have to be paid in order to make the papers tradeable.

IDBI is also in the process of preparing the offer prospectus to list itself on the stock exchanges. This prospectus will be floated on the exchange website as part of the disclosures to be maintained under the revised norms.

The minimum lot size in the issue will also be increased from Rs 5 lakh to Rs 10 lakh. The IDBI Trusteeship Company will be the trustee for the institution's debentures as per the new regulations.

IDBI is the most frequent borrower from the debt market and taps it almost every ten days for fund mobilisation.

There are two sets of instruments through which the borrowing programme is accomplished. One is through Omnibonds, which are privately placed with qualified institutional buyers (QIBs) in the market.

QIBs are select parties identified by the market regulator who can buy papers in the private placement market.

The other is through Flexibonds that are floated through public issue and are already in compliance with the regulatory requirements of disclosures and governance.

In order to facilitate the process of listing, the National Stock Exchange and Bombay Stock Exchange are in the process of restructuring their listing fees so as to make it cost effective for the borrowers to list their issues each time they access it.

While the BSE has already reduced listing fees per issue from Rs 7,500 to Rs 5,000, the NSE is understood to be working on it.