CURRENT AFFAIRS : BANKING & FINANCE
RBI Implements Measures to Safeguard Individual Investors from Losses in Case of Issuer Default on Short-Term Financial Instruments
- The Reserve Bank of India (RBI) has taken this step to make sure that individual investors’ losses are minimised if issuers default on short-term financial instruments.
- These Directions shall come into force with effect from April 01, 2024.
Key Highlights :
- Individual Investor Limits : Individual investors’ investment in short-term Commercial Papers (CPs) and Non-Convertible Debentures (NCDs) is now capped at 25% of the issue size.
- Previously, there were no specific limits for individual investors’ investments in such instruments.
- Applicability of the Rule : The 25% limit applies to the total subscription by all individuals, including Hindu Undivided Families (HUF), in any primary issuance of CPs or NCDs.
