SEBI Proposes New Rules for Debt Securities

On Friday, SEBI put forward a proposal to amend regulations, enabling the issuance of zero-coupon debt securities and non-convertible redeemable preference shares (NCRPS) at a lowered face value of Rs 10,000.

This proposal addresses market feedback, as the existing framework limits lower denomination issuance to interest or dividend-bearing instruments, thereby restricting flexibility for issuers and investors.

According to a consultation paper, SEBI plans to allow private placement issuers to offer either interest/dividend-bearing securities or zero-coupon/dividend securities at Rs 10,000 face value, as long as they adhere to a fixed maturity and exclude structured obligations.

If approved, this change will apply to all debt securities and NCRPS issues proposed for private placement listings on exchanges, as per SEBI's announcement. The regulator has issued a draft circular and is accepting public comments until August 21.

SEBI has also instructed stock exchanges, depositories, and clearinghouses to update their systems to align with the revised regulations.

(With inputs from agencies.)