Further, the innovative features and the high amount of issuance of such instruments pose systemic risks. The suggestion of the market participants in expanding the eligible entities that can act as Debenture Trustees for the issuance of NCDs with less than one year maturities is being examined by the Reserve Bank.
However, the suggestion for relaxing the minimum tenor of these NCDs from the proposed tenor of 90 days to 7 days cannot be acceded to as under the law, corporates are prohibited from issuing unsecured debentures with maturity of less than 90 days. Allowing markets to issue very short-term instruments can have systemic implications.