Requirement of Debenture Redemption Reserve (DRR)

MCA vide notification dated 16^th August, 2019 amended Companies (Share Capital and debenture) Rules, 2014.

Pursuant to amendment in abovementioned rules, new conditions for creation of DRR and investment or deposit of sum in respect of debenture maturing during the year ending on 31^st march of next year are as follows:

Type of Company	Type of issue	DRR requirement pursuant to amendment	Remarks
All India Financial Institutions  (AIF) i.e. EXIM Bank, NABARD, NHB and SIDBI regulated by RBI	Public as well as privately placed debentures	Not required (Rule 18(7)(b)(i))	No Change
Banking Companies	Public as well as privately placed debentures	Not required (Rule 18(7)(b)(i)	No Change
Public Financial Institutions (Sec. 2(72) of Co.’s Act, 2013	Public as well as privately placed debentures	Not required – (DRR as applicable to NBFCs regd. With RBI (Rule 18(7)(b)(ii))	No Change
Listed Companies (Other AIF and Banking companies)
NBFCs regd. With RBI	Public Issue of debentures	Not required (Rule 18(7)(b)(iii)(A))	Earlier it was 25% of value of outstanding debentures as per SEBI regulations*
NBFCs regd. With RBI	privately placed debentures	Not required (Rule 18(7)(b)(iii)(B))	No Change
Housing Finance Co’s regd. With National Housing Bank	Public Issue of debentures	Not required (Rule 18(7)(b)(iii)(A))	Earlier it was 25% of value of outstanding debentures as per SEBI regulations*
Housing Finance Co’s regd. With National Housing Bank	privately placed debentures	Not required (Rule 18(7)(b)(iii)(B))	No Change
Other listed companies	Public issue of debentures	Not required (Rule 18(7)(b)(iii)(A))	No Change
Other listed companies	privately placed debentures	Not required (Rule 18(7)(b)(iii)(B))	Earlier it was 25% of value of outstanding debentures as per SEBI regulations*
Unlisted Companies other than AIF and Banking Companies
NBFCs regd. With RBI	Privately Placed debentures	Not required (Rule 18(7)(b)(iv)(A))	No Change
Housing Finance Co’s regd. With National Housing Bank	Privately Placed debentures	Not required (Rule 18(7)(b)(iv)(A))	No Change
Other unlisted Companies	Privately Placed debentures	10% of value of outstanding debentures (Rule 18(7)(b)(iv)(B))	Earlier it was 25% of the value of outstanding debentures

* SEBI (Issue and Listing of Debt Securities), Regulations 2008 – as referred in earlier Rule 18(7) of Companies (Share Capital and Debentures) Rules, 2014 

Requirement to invest in liquid instruments in case of issue of debentures:

Further, the  following companies shall on or before 30^th day of April  in each year in respect of issue of debentures by the company invest or deposit as the case may be  a Sum not less than 15%  of amount maturing during year ending on 31^st March of next year in any method as prescribed in rules.

• NBFCs and HFCs (Listed and Unlisted both)

• Other Listed companies other than AIF and banking Companies

• Unlisted companies having adequacy of DRR