SEBI lets certain listed, regulated issuers skip the merchant banker for ₹10,000 face value privately placed debt rated AA- or above: Circular HO/17/11/24(7)2026-DDHS-POD1/I/23122/2026
SEBI has relaxed the rule that an issuer must appoint at least one merchant banker when it privately places debt securities or non-convertible redeemable preference shares at a face value of ₹10,000. An issuer may now go without a merchant banker if it meets five conditions together, covering its regulator, listing record, default history, the security offered and a rating of at least AA-. The change took effect immediately on 7 October 2026.
Key facts
In 30 seconds
- The circular is dated 7 October 2026 and replaces para 1.3 of Chapter V of the NCS Master Circular dated 15 October 2025.
- The issuer must be registered with or regulated by a financial sector regulator in India: SEBI, RBI, IRDAI or PFRDA.
- It must have been listed in any segment of a recognised stock exchange for at least one year, with no pending SEBI or exchange fines or penalties for LODR non-compliance.
- No default in the last three financial years and the current financial year on debt securities, preference shares, securitised debt, commercial papers, deposits or loans, certified by the statutory auditor.
- The debt security must be unsubordinated/senior and secured by a first or pari passu charge on identifiable assets; CPSEs, PSUs and statutory bodies may issue secured or unsecured.
- The security must be rated at least AA- on the date of private placement; with multiple ratings, the lowest one counts.
हिंदी में सार
SEBI ने 7 अक्टूबर 2026 के सर्कुलर से ₹10,000 अंकित मूल्य पर private placement से जारी debt securities के लिए merchant banker नियुक्त करने की अनिवार्यता में छूट दी है। छूट तभी मिलेगी जब पाँचों शर्तें पूरी हों: issuer SEBI, RBI, IRDAI या PFRDA से विनियमित हो, कम से कम एक साल से सूचीबद्ध हो और LODR का कोई जुर्माना बकाया न हो, पिछले तीन वित्त वर्षों और चालू वर्ष में कोई default न हो, security senior और secured हो, और रेटिंग कम से कम AA- हो। यह बदलाव तुरंत प्रभाव से लागू है।
Before and now
The issuer had to appoint at least one merchant banker, with the same role, responsibilities and obligations as in a public issue.
The issuer may not appoint a merchant banker if it fulfils all five conditions set out in the replaced para 1.3; otherwise the appointment continues to be required.
What has changed
Clause 1.3 of Chapter V of SEBI’s Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated 15 October 2025 (the NCS Master Circular) allows an issuer to issue a debt security or non-convertible redeemable preference share on private placement basis at a face value of ₹10,000. One of its conditions was that the issuer must appoint at least one merchant banker, whose role, responsibilities and obligations are the same as in a public issue.
By a circular dated 7 October 2026, SEBI has replaced para 1.3. The requirement to appoint a merchant banker stays as the general rule, but an issuer may not appoint a merchant banker if it fulfils all the conditions listed below.
SEBI says the decision is based on feedback from market participants and is meant to enhance ease of issuing debt securities and to expand access of high-rated securities to retail investors.
The five conditions
| Condition | What the circular requires |
|---|---|
| Regulated issuer | The issuer is registered with or regulated by a financial sector regulator in India, namely SEBI, RBI, IRDAI or PFRDA. |
| Listing record | The issuer is listed in any segment on any recognised stock exchange for at least one year, and there are no pending fines or penalties levied by SEBI or the stock exchanges for non-compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The stock exchange confirms this when granting in-principle approval for the issue. |
| No default | The issuer has not defaulted in the last three financial years and the current financial year on redemption/repayment or interest/dividend on its debt securities, non-convertible redeemable preference shares, securitised debt instruments, commercial papers, deposits or loans. A certificate from the statutory auditor to this effect is to be submitted to the stock exchange. |
| Nature of the security | The debt security is unsubordinated/senior and secured by a first or pari passu charge on the identifiable assets of the issuer. For Central Public Sector Enterprises, Public Sector Undertakings and statutory bodies, the debt security may be secured or unsecured. |
| Rating | The debt security is rated at least AA- or above on the date of private placement. In case of multiple ratings, the lowest rating is considered for determining eligibility. |
All five conditions have to be met. An issuer that does not meet any one of them continues to be covered by the requirement to appoint at least one merchant banker.
Role of the stock exchanges
Stock exchanges are to specify suitable operational requirements, such as disclosure formats and submissions to be made by the issuer, to comply with the conditions. They and the depositories are also advised to amend their bye-laws, rules and regulations as necessary, carry out system changes, disseminate the circular on their websites, communicate the status of implementation to SEBI and monitor compliance by issuer companies.
Effective date
The provisions come into force with immediate effect. All other provisions of Chapter V of the NCS Master Circular remain unchanged.
What issuers should do
An issuer planning to use the exemption should check each of the five conditions against the proposed issue, obtain the statutory auditor’s no-default certificate for submission to the stock exchange, and confirm that no LODR fine or penalty is pending, since the exchange will verify this at the in-principle approval stage. The formats and submissions will be those the stock exchanges specify.
Questions and answers
Has SEBI removed the merchant banker requirement for all private placements of debt?
No. The circular replaces para 1.3 of Chapter V of the NCS Master Circular, which deals with private placement of debt securities or non-convertible redeemable preference shares at a face value of ₹10,000. The appointment of at least one merchant banker remains the rule; an issuer may do without one only if it fulfils all five conditions in the circular.
Which issuers can use the exemption?
Issuers registered with or regulated by SEBI, RBI, IRDAI or PFRDA that have been listed in any segment of a recognised stock exchange for at least one year, have no pending SEBI or exchange fines or penalties for LODR non-compliance, and have not defaulted in the last three financial years and the current financial year.
What rating must the debt security have?
At least AA- or above on the date of private placement. If the security has more than one rating, the lowest rating is considered for determining eligibility.
Does the debt have to be secured?
Yes. It must be unsubordinated/senior and secured by a first or pari passu charge on the identifiable assets of the issuer. For Central Public Sector Enterprises, Public Sector Undertakings and statutory bodies, the debt security may be secured or unsecured.
When does the relaxation take effect?
With immediate effect. The circular is dated 7 October 2026.
Published 7 October 2026. Updated 10 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.