To deepen the bond market, Sebi is looking to introduce the concept of ‘fast track’ public issuance for debt securities and further reduce the face value of debt securities, including non-convertible debentures, issued on a private placement basis to Rs 10,000 from Rs 1 lakh at present.

If implemented, the move would also promote ease of doing business.

“The main intention of a fast track public issuance of debt securities is to facilitate frequent issuers with a consistent track record, to make public issues of debt securities with reduced time, cost and effort,” Sebi said in its consultation paper.

To further enhance the participation of the non-institutional investors in the corporate bond market, Sebi has “proposed to permit issuers to launch NCDs (non-convertible debentures) or NCRPS (non-convertible redeemable preference shares) with the face value of Rs 10,000”.

However, in such cases, the issuer should appoint a merchant banker who would carry out due diligence for issuance of such privately placed NCDs and NCRPS and disclosure requirements in the private placement memorandum, Sebi said.

Further, such debt securities should be plain vanilla with a simple structure and should not have any credit enhancements or structured obligations, it added.

This came after Sebi in October 2022 cut the face value to Rs 1 lakh from Rs 10 lakh earlier. The decision along with the mainstreaming of Online Bond Platforms (OBPs) has helped in enhancing the participation of non-institutional investors in the bond market.

During the period from July to September 2023, it was observed that non-institutional investors subscribed to 4 per cent of the total amount raised as compared with the general average of less than 1 per cent. Besides, the total volume of trades undertaken on the OBPs aggregates to around Rs 333 crore by 1974 users (investors), Sebi noted.

Further, the regulator has suggested the requirement of appointment of a merchant banker in case of issuance of Securitised Debt Instruments (SDIs) at a face value of Rs 10,000. Sebi suggested that instead of inserting the audited financials for the last three financial years and Stub period financials in the offer document, the same should be allowed to be provided as a QR code scanning which opens the web link to the financials on the issuer’s website.

Further, details of certain information required for the current year such as Related Party Transactions (RPTs), and remuneration of directors among others to be specified as required up to the latest quarter. Also, Sebi has suggested that record dates should be standardized 15 days before the due date of payment of interest or redemption.

The regulator has “proposed to consider, like equity issuance, an avenue to debt issuers to make the issuance of public issues on fast-track basis”.

Suggesting modalities, Sebi said that the need to seek comments from the public on a draft offer document for fast-track public issues should be reduced to two working days.