Capital markets watchdog Sebi on Friday extended compliance requirements to three years, requiring “large corporations” to raise incremental borrowings of at least 25% via debt securities in one continuous block from the current two years.

This comes after Sebi’s board approved proposals in this regard on Wednesday. Currently, the rules require large companies to mobilize at least 25% of incremental borrowing in a fiscal year by issuing bonds, which must be repaid within two consecutive years.

In a circular, SEBI “decided that the contiguous block of two years over which large corporates are required to meet the mandatory requirement of raising a minimum of 25 per cent of their incremental borrowings in a financial year by issuing debt securities, shall be extended to contiguous block of three years (from the current requirement of two years) from the financial year 2021-22 onwards.

If large companies fail to meet the requirements, these entities must explain this deficiency to the stock exchange in a prescribed manner.

The latest decision took into account representations from market participants as well as a review of the matter by the Securities and Exchange Board of India (Sebi).

A large corporation is defined as a corporation that needs to have at least Rs 100 crore outstanding long-term borrowings, with a credit rating of AA and above, aiming to finance itself through long-term borrowings (1+ year).