A Securities and Exchange Board of India (Sebi) rule that mandates companies to issue bonds for at least 25 per cent of their incremental borrowings will lead to the issue of bonds of around Rs 50,000 crore over five years, Crisil Ratings estimated on Thursday.

At a meeting on Tuesday, the Sebi board cleared the framework for enhanced market borrowings by large corporate houses that would come into force from April 1, 2019.

Big companies would now have to raise 25 per cent of their incremental borrowings for a particular year through the bond market.

Companies, other than scheduled commercial banks, that meet certain criteria would be categorised as large corporate houses.

Long-term borrowings are those having a maturity period of more than one year.

Sebi said for the first two years — 2019-20 and 2020-21 — the entities concerned would be subject to “comply or explain” mechanism.

In case of a failure to raise through the bonds, it has to be disclosed by the large corporate to the stock exchanges.

Crisil said in a note the Sebi move could result in around Rs 40,000-50,000 crore of additional corporate bond issuances over the next five years.

The rating agency added the issues will depend on the investment climate in the country and trends in corporate bond and external commercial borrowings markets.

The Sebi framework defines large companies as having outstanding borrowing of Rs 100 crore or more, a credit rating of “AA” or higher and having its securities listed on the stock exchanges.

“Crisil’s analysis shows 444 companies with aggregate rated long-term borrowings of around Rs 45 lakh crore as of 2017-18 come in this category.

However, around 210 of these 444 companies have already been sourcing at least a quarter of their funding needs from the corporate bond market. So the remaining 234 would be the ones driving incremental issuances.

At present, they hold only around Rs 6 lakh crore of rated, long-term debt’’, the rating agency said.

According to Gurpreet Chhatwal, president, Crisil Ratings, the Sebi’s framework is a step in the right direction to deepen the corporate bond market and usher in a market-oriented, risk-based pricing culture.