Sebi proposes easing merchant banker rule for small-value debt issues
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The Securities and Exchange Board of India (Sebi) has proposed exempting certain listed issuers from the mandatory appointment of a merchant banker for small-value debt raised through private placement, aiming to cut costs and delays in the debt market. In a consultation paper issued on Thursday, the market regulator said the limited availability of merchant bankers in the debt segment and the delays involved in appointing them can also hinder small-value debt issuance. This is particularly relevant in a market where yields can change quickly, potentially raising the issuer's cost of borrowing if a transaction is delayed. Under the existing framework, issuers of debt securities or non-convertible redeemable preference shares, issued through private placement at a face value of ₹10,000, are required to appoint at least one merchant banker. The proposed exemption, however, is restricted to issuers that meet four conditions. The issuer must be registered with or regulated by a financial sector regulator in India, including Sebi, the Reserve Bank of India, the Insurance Regulatory and Development Authority of India or the Pension Fund Regulatory and Development Authority. It must also have been listed on a recognized stock exchange for at least one year and have no pending fines or penalties from Sebi or stock exchanges for applicable listing-related non-compliance. The issuer must also have no defaults over the previous three financial years and the current financial year on specified obligations, including debt repayments, interest payments, term loans, deposits and dividends. An auditor's certificate confirming this will have to be submitted to the stock exchange. The debt being issued must be senior or unsubordinated and secured by a first or pari passu charge on identifiable assets of the issuer. It must carry a credit rating of at least AA- at the time of private placement. Sebi said these conditions are intended to limit the exemption to relatively lower-risk instruments and issuers with demonstrated repayment capacity. The market regulator has invited public comments on the proposal until 17 September. Apoorva is a Mumbai-based journalist at Mint who covers the Securities and Exchange Board of India (SEBI), tracking the pulse of India’s capital markets, regulatory developments and the people who operate within them. She holds a postgraduate diploma in business and financial journalism from the Asian College of Journalism, where she developed a strong foundation in markets, companies, and economic policy. She began her journalism journey with an internship at Bloomberg, where she worked across beats such as real estate, infrastructure, capital markets, and deals, which helped her understanding of business and finance.<br><br>She is guided by the belief that everything in this world can be explained in simple and fewer words, and that idea shapes how she approaches her writing. She aims to cut through complexity and present nuanced regulatory and financial developments in a way that is both accessible and meaningful to readers.<br><br>When she is not tracking market chatter, Apoorva can usually be found deep into a fiction novel or out on a long run. She is also a trained classical dancer in Bharatanatyam, Mohiniyattam, and Kathakali. Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates. Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
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