The Securities and Exchange Board of India (Sebi) has unveiled plans to relax rules for debt issuers, aiming to reduce operational hurdles and promote greater liquidity in the Indian debt market, including higher ISIN limits and exemptions for green bonds.
Sebi has proposed easing rules for debt issuers in a move aimed at reducing funding strain and improving liquidity management across the market. The regulator wants to drop a requirement that newly listed issuers must immediately bring all previously unlisted non-convertible debt securities issued after January 1, 2024, into the listing framework, while keeping the obligation for later borrowings intact.
According to Sebi, the earlier rule created operational difficulties and added costs for issuers that had already sold the debt. In its consultation paper, the regulator said scrapping that mandate could encourage more listings by making the process less cumbersome. The proposal follows a broader effort by Sebi to refine debt-market rules, after it recently approved the return of open-market buybacks through stock exchanges and eased other borrowing-related norms for mutual funds.
The regulator also wants to raise the ceiling on the number of International Securities Identification Numbers, or ISINs, that can mature in a financial year to 17 from 14. Under the proposal, up to 12 would be allowed for plain-vanilla debt instruments and five for structured and market-linked products, including floating-rate and zero-coupon bonds. Sebi is also considering a tiered system for larger issuers, allowing additional ISINs once outstanding plain-vanilla debt due in a year reaches ₹15,000 crore, with one extra ISIN for every further ₹3,000 crore.
Sebi said it also wants to exempt certain borrowings from the cap altogether, including Government of India-serviced bonds, extra-budgetary resource bonds and ESG debt securities. The regulator said excluding GoI and extra-budgetary resource bonds would give public sector undertakings more room to finance their own needs, while the ESG carve-out is intended to encourage green and sustainability-linked issuance. The proposals were prompted by market feedback that the existing limits can cause liability bunching and refinancing pressure, especially for non-banking financial companies. Public comments are open until August 31.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
