In order to ensure consistency, regulator Sebi today asked market intermediaries to follow a uniform methodology for calculating interest payments on debt securities.
It has received representations from market participants that different conventions are being followed for calculating interest payments on debt securities and different holiday calendars are considered for leap year calculations and payment of interest and maturity proceeds respectively.
In case the payment date falls on a holiday, it may be made on the following working day; however, the dates of the future coupon payments would be as per the schedule originally stipulated at the time of issuing the security, the Securities and Exchange Board of India (Sebi) said in a circular.
"The subsequent coupon schedule would not be disturbed merely because the payment date in respect of one particular coupon payment has been postponed earlier because of it having fallen on a holiday," it added.
In case of a leap year, if February 29 falls during the tenor of a security, then the number of days shall be reckoned as 366 days for a whole one year period, irrespective of whether the interest is payable annually, half yearly, quarterly or monthly.
It is thus emphasised that for a half yearly interest payment, 366 days would be reckoned twice as the denominator; for quarterly interest, four times and for monthly interest payment, 12 times.
In order to ensure uniformity for payment of interest and redemption with respect to debt securities, it has been decided that interest/redemption payments would be made only on the days when the money market is functioning in Mumbai.
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