SEBI mulls scrapping merchant banker rule for small-ticket debt

Market regulator SEBI on Thursday proposed granting an exemption from the mandatory appointment of a merchant banker for small-value debt issued through a private placement basis by listed entities.

The move is aimed at reducing compliance costs and boosting market development.

The current rule requires issuers to appoint at least one merchant banker for private placements of debt securities or non-convertible redeemable preference shares with a face value of Rs 10,000.

This increases the cost of capital for issuers, eroding the economic viability of planned issuances, thereby discouraging frequent small-value debt issuances, Sebi said in its consultation paper.

Accordingly, SEBI has proposed to exempt “small-value debt” issues from the requirement to appoint merchant bankers.