SEBI proposes to exempt certain listed issuers from appointing a merchant banker for privately placed debt of ₹10,000 face value; comment window closed on 17 September 2026
A SEBI consultation paper issued on 27 August 2026 proposes that an issuer of privately placed debt with a face value of ₹10,000 may be exempted from appointing a merchant banker if four conditions are met: it is regulated by a financial sector regulator, listed for at least one year, has no default in the last three financial years and the current year, and the debt is senior, secured and rated at least AA-. Comments were due by 17 September 2026; the window has closed.
Key facts
- In force
- Proposal only; comments were due by 17 September 2026 (window closed)
- Who it affects
- Listed issuers of privately placed debt securities with ₹10,000 face value (notably NBFCs), merchant bankers, stock exchanges, depositories
- What it is
- Comments invited
- Section
- SEBI
- Published
- 27 August 2026
In 30 seconds
- Clause 1.3 of Chapter V of the NCS Master Circular dated 15 October 2025 requires at least one merchant banker for private placement of debt or NCRPS at a face value of ₹10,000 (“small-value debt”).
- Proposed: exemption from that requirement, subject to four conditions.
- Issuer must be registered with or regulated by a financial sector regulator in India — the draft circular names SEBI, RBI, IRDAI or PFRDA.
- Issuer must be listed in any segment on a recognised stock exchange for at least one year, with no pending fines or penalties under the LODR Regulations.
- No default in the last three financial years and the current financial year, supported by an auditor’s certificate to the stock exchange.
- The debt security must be unsubordinated/senior, secured by a first or pari passu charge on identifiable assets, and rated at least AA-.
हिंदी में सार
SEBI ने 27 अगस्त 2026 के कंसल्टेशन पेपर में प्रस्ताव रखा है कि ₹10,000 अंकित मूल्य वाले प्राइवेट प्लेसमेंट डेट के लिए कुछ सूचीबद्ध जारीकर्ताओं को मर्चेंट बैंकर नियुक्त करने से छूट मिले। शर्तें चार हैं: जारीकर्ता SEBI, RBI, IRDAI या PFRDA से विनियमित हो, कम से कम एक साल से सूचीबद्ध हो, पिछले तीन वित्त वर्ष और चालू वर्ष में कोई डिफ़ॉल्ट न हो, और डेट सीनियर, सुरक्षित तथा कम से कम AA- रेटेड हो। यह सिर्फ़ प्रस्ताव है; टिप्पणी की आख़िरी तारीख़ 17 सितंबर 2026 थी, जो निकल चुकी है।
Before and now
The issuer shall appoint at least one merchant banker, with the same role and obligations as in a public issue.
Proposed (not decided): the issuer may be exempted if it meets four conditions on regulation, listing history, default record and the security’s rating and charge.
What the paper is about
SEBI issued a consultation paper on 27 August 2026 proposing an exemption from the mandatory appointment of a merchant banker for “small-value debt” issued through private placement by certain listed issuers. This is a proposal for public comment, not a decision. Comments were to be submitted latest by 17 September 2026; that window has closed.
The present rule
Clause 1.3 of Chapter V of SEBI’s NCS Master Circular dated 15 October 2025 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, subject to conditions. One of them is that the issuer shall appoint at least one merchant banker, whose role, responsibilities and obligations are the same as in a public issue.
Why SEBI is reviewing it
Market participants have told SEBI that the mandate creates difficulties for small-value debt offerings:
- the cost of appointing merchant bankers is a disproportionate burden and reduces the economic viability of such offerings;
- there is a limited number of merchant bankers in the debt segment;
- it causes significant delays in executing private placements, in a market where price discovery is highly time-sensitive and yields can shift adversely.
The paper also notes that listed issuers are already under the LODR Regulations, with governance requirements, continuous disclosures and regulatory scrutiny, and that a large number of issuers of listed debt are RBI-registered or regulated NBFCs with additional prudential oversight.
The four proposed conditions
| Condition | What is proposed |
|---|---|
| Regulated issuer | The issuer is registered with or regulated by a financial sector regulator in India. The draft circular specifies SEBI, RBI, IRDAI or PFRDA |
| Listing history | The issuer is listed in any segment on any recognised stock exchange for at least one year. At the time of in-principle approval, the stock exchange is to ensure there are no pending fines or penalties levied by SEBI or the stock exchanges for non-compliance with the LODR Regulations |
| No default | No default in the last three financial years and the current financial year in repayment of deposits or interest, redemption of non-convertible preference shares or debt securities and interest on them, declaration and payment of dividend, or repayment of any term loan or interest. The issuer submits an auditor’s certificate to this effect to the stock exchange |
| Nature of the security | The debt security is unsubordinated/senior, “secured” by a first or pari passu charge on the identifiable assets of the issuer, and rated at least AA- on the date of private placement |
In the draft circular
- Para 1.3 of the NCS Master Circular would be modified to add the exemption; all other provisions of Chapter V remain unchanged.
- The draft says its provisions would apply with immediate effect once issued.
- Stock exchanges and depositories would amend bye-laws and systems, and monitor compliance by issuers.
What issuers should note
Until a final circular is issued, a merchant banker remains mandatory for a private placement at ₹10,000 face value. If the proposal is adopted as drafted, the exemption would not be available for unsecured or subordinated debt, for securities rated below AA-, or to issuers not regulated by one of the four named regulators.
Questions and answers
Is a merchant banker still mandatory for a ₹10,000 face-value private placement?
Yes, as of now. Clause 1.3 of Chapter V of the NCS Master Circular dated 15 October 2025 requires at least one merchant banker. SEBI has only proposed an exemption in a consultation paper issued on 27 August 2026.
What is “small-value debt” in this paper?
A debt security or non-convertible redeemable preference share issued on private placement basis at a face value of ₹10,000.
Which issuers would qualify for the proposed exemption?
Issuers registered with or regulated by a financial sector regulator in India (the draft circular names SEBI, RBI, IRDAI or PFRDA), listed for at least one year with no pending LODR fines or penalties, with no default in the last three financial years and the current year, issuing senior, secured debt rated at least AA-.
What proof of the no-default record is proposed?
The issuer would submit an auditor’s certificate to the stock exchange.
Is the comment window still open?
No. Comments were to be submitted latest by 17 September 2026.
Published 27 August 2026. Updated 6 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.