SEBI has removed the mandatory merchant banker requirement for eligible listed issuers raising small-value debt of ₹10,000. Additionally, the regulator has increased the limit for debt ISINs maturing in a financial year from 14 to 17. These changes aim to lower compliance costs and improve asset-liability management for corporate borrowers.
The Securities and Exchange Board of India (SEBI) has introduced new rules to streamline the private debt market, effective October 7, 2026. The regulator has announced two major shifts: an exemption from mandatory merchant banker appointments for specific issuers and an increase in the number of debt ISINs (International Securities Identification Numbers) allowed for maturity within a single financial year.
Exemption for Small-Value Debt Issuers
Under the new framework, eligible listed companies can now raise funds through private placement of debt with a face value of ₹10,000 without needing to appoint a merchant banker. This move is designed to reduce compliance costs and speed up the fundraising process. However, this waiver is not available to everyone. To qualify, an issuer must be regulated by a recognized financial authority, such as the Reserve Bank of India (RBI), SEBI, the Insurance Regulatory and Development Authority of India (IRDAI), or the Pension Fund Regulatory and Development Authority (PFRDA).
Additionally, companies must meet strict financial health standards to benefit from this exemption. An issuer must have been listed on a stock exchange for at least one year and have a clean record with no defaults on debt or interest payments over the last three financial years. Furthermore, the debt instruments must hold a minimum credit rating of AA-. This focus on credit quality ensures that only financially stable companies can bypass the merchant banker requirement.
Increased Flexibility for Asset-Liability Management
SEBI has also increased the maximum number of ISINs maturing in a financial year from 14 to 17. An ISIN acts as a unique identification code for debt securities. The new structure allows for 12 ISINs for plain-vanilla debt and 5 for structured, market-linked, or specialized debt instruments. For larger issuers with outstanding maturities of ₹15,000 crore or more, the regulator has allowed additional ISINs for every subsequent ₹3,000 crore of debt. This change is particularly beneficial for banks and Non-Banking Financial Companies (NBFCs), as it provides greater flexibility in managing their asset-liability profiles and liquidity needs.
Investor Perspective and Risks
While these changes aim to improve market efficiency, they shift some responsibility toward the issuers and credit rating agencies. The removal of the merchant banker requirement for small-value debt means less third-party oversight for those specific issuances. Investors will likely need to rely more heavily on the issuer's self-compliance and credit ratings. There is also a potential risk if issuers fail to manage their debt maturities effectively despite the increased flexibility. As the market adapts to these rules, the key monitorable for investors will be how effectively companies utilize these exemptions while maintaining transparency in their debt structure.