MANU/SMFD/0006/2021

Ministry : Securities and Exchange Board of India

Department/Board : Investment Management Department

Circular No. : SEBI/HO/IMD/DF4/CIR/P/2021/032

Date : 10.03.2021

Notification/ Circulars Referred : Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160 dated December 28, 2018 MANU/SMFD/0010/2018;Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/127 dated November 07, 2019 MANU/SMFD/0016/2019;Circular No. MRD/CIR/8/92/2000 dated September 18, 2000 MANU/SMFD/0014/2000;Circular No SEBI/IMD/CIR No.12/147132/08 dated December 11, 2008 MANU/SMFD/0034/2008

Citing Reference:
Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160 dated December 28, 2018 MANU/SMFD/0010/2018  Referred

Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/127 dated November 07, 2019 MANU/SMFD/0016/2019  Referred

Circular No. MRD/CIR/8/92/2000 dated September 18, 2000 MANU/SMFD/0014/2000  Referred

Circular No SEBI/IMD/CIR No.12/147132/08 dated December 11, 2008 MANU/SMFD/0034/2008  Referred

All Mutual Funds (MFs)/Asset Management Companies (AMCs)/
Trustee Companies/ Boards of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)

Sir / Madam,

Review of norms regarding investment in debt instruments with special features, and the valuation of perpetual bonds

A. Review of Norms of Investment in Instruments having Special Features

1. Mutual Funds invest in certain debt instruments with special features viz. subordination to equity (absorbs losses before equity capital) and /or convertible to equity upon trigger of a pre-specified event for loss absorption. Additional Tier I bonds and Tier 2 bonds issued under Basel III framework are some instruments which may have above referred special features. The debt instruments having such special features as referred above, which otherwise are Non-Convertible Debentures, may be treated as debt instruments until converted to equity.