Market regulator Sebi has proposed raising the annual limit for maturing private debt securities from 14 to 17 to help corporations and NBFCs manage debt better. The move aims to reduce refinancing stress and prevent the bunching of debt repayments. Public comments on this proposal are open until August 31, 2026.
The Securities and Exchange Board of India (Sebi) has released a consultation paper proposing a change in the rules for private debt securities. The regulator intends to increase the annual limit for maturing debt instruments, known as International Securities Identification Numbers (ISINs), from the current 14 to 17 per financial year. This update is designed to assist Non-Banking Financial Companies (NBFCs) and large corporations in better managing their liability profiles.
ISINs act as unique identification codes for debt securities, and the existing cap of 14 has often been cited by market participants as a hurdle for effective liquidity management. When companies have to fit all their debt maturities into a limited number of ISINs, it can lead to the 'bunching' of repayments, which increases refinancing risk—the risk that a company may struggle to pay off or roll over its debt when it comes due. By increasing the limit, Sebi aims to give issuers more flexibility to spread out these maturity dates.
New Allocation Limits
Under the proposed structure, the 17 ISINs would be allocated for different types of debt. Issuers would be allowed up to 12 ISINs for plain-vanilla debt securities, an increase from the current limit of nine. Additionally, five ISINs would be permitted for specialized or structured debt, which includes market-linked debt, floating rate bonds, zero-coupon bonds, and Tier-II capital instruments.
Sebi has also introduced a provision for large issuers to gain extra flexibility. Once a company reaches a threshold of ₹15,000 crore in outstanding debt across the 12 plain-vanilla ISINs, it may be permitted to add one more ISIN. For every additional ₹3,000 crore of debt maturing in that financial year, further ISINs could be allowed, ensuring that the regulatory framework grows alongside the scale of the issuer.
Boosting Green Finance and Reducing Costs
To encourage sustainable investment, the proposal suggests that ISINs used for ESG (Environmental, Social, and Governance) debt securities should not be counted toward these annual caps. Similarly, bonds serviced by the Government of India or those under Extra Budgetary Resources (EBR) may also be excluded from these limits, further streamlining the process for issuers in these categories.
In a separate move to lower operational burdens, Sebi has proposed relaxing the requirements for listing unlisted non-convertible debentures (NCDs). Currently, companies must list all outstanding unlisted NCDs issued after January 1, 2024, if they want to list new debt securities. The regulator is considering removing this mandatory requirement for older issuances, acknowledging that the rule may have contributed to a decline in the share of listed debt in the market.
Investors and market participants have until August 31, 2026, to submit their views on these proposals. The final outcome of these suggestions could significantly impact how large Indian companies and NBFCs plan their borrowing schedules and manage their cash flows in the coming years.