NCD Incentives
SEBI moots allowing debt issuers to offer incentives to certain investors
This story was originally published at 17:56 IST on 27 October 2025
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MUMBAI – The Securities and Exchange Board of India has proposed permitting debt issuers to offer incentives in public issues to a specific category of investors to encourage them to invest in debt securities. The proposed incentives will promote the development of the bond market, the regulator said in a consultation paper inviting feedback.
Currently, SEBI bars debt issuers from offering incentives. "Any person connected with the issue shall not offer any incentive, whether direct or indirect, in any manner, whether in cash or kind or services or otherwise, to any person for making an application in the issue, except for fees or commission for services rendered in relation to the issue," according to the SEBI (Issue and Listing of Non-Convertible Securities) Regulations.
However, given the fall in public issuance of non-covertible debentures, SEBI said there is a need to revisit the regulation. The new regulation proposes to permit issuers to offer incentives in the form of a higher coupon rate or a discount to the issue price to certain categories of allottees like senior citizens, women, armed forces personnel and retail subscribers to encourage retail participation in debt securities, while providing a fillip to the number of public issuances in the debt market, SEBI said.
The incentive will be at the issuer's sole discretion and should be disclosed upfront in the offer document. Further, the incentive should be limited to the original allottees of the public issue, SEBI said.
The regulator said there are similar offerings in other sectors, such as the offer-for-sale in equities and bank fixed deposits, where discounts are offered. SEBI has invited comments on the consultation paper by Nov. 17. End
Reported by Kabir Sharma
Edited by Saji George Titus
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