Fast Track Evolution: SEBI’s Consultation Paper on the Fast-track Issuance of  Debt  Securities

[By Tirth Purani & Ananya Sinha]

The authors are students of Institute of Law, Nirma University and KIIT School of Law, Bhubaneswar, Odisha respectively.



To make India’s debt securities market robust, the Securities and Exchange Board of India (SEBI) introduced a consultation paper on 9 December 2023, prescribing amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (LODR Regulations) and the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, (NCS Regulations). Along with the amendments in the regulations, SEBI has also introduced fast-track public issuance and listing of debt securities. These amendments were driven by the Union Budget (2023-24) which settled its primary focus to ease the existing regulations and simplify and reduce the cost of compliance. To elevate ease of doing of business Over 3,000 law provisions were decriminalized, and more than 39,000 compliances were decreased. To put this into effect, SEBI constituted a specialized Corporate Bonds and Securitization Advisory Committee, to propose strategies for enhancing ease of doing business for debt issuers listed on the stock exchange and assess the LODR and NCS Regulations.  

The authors of this post attempt to showcase the consequences of the consultation paper on India’s debt securities market and the facilitation of business operations through its proposals and recommendations. The piece aims to elaborate on the recommendations concerning the reduction of the minimum face value for non-convertible securities, need for an efficient regulatory procedure, and abolishing the requirement of minimum subscription for banks and financial institutions.  

Lacunas in the existing framework and Underlying Reasoning  

Debt securities such as bonds and debentures are pertinent for a company’s growth and benefit as they are efficient and cost friendly. India’s debt securities market has grown considerably, as the market of corporate bonds took a leap from Rs 16.49 lakh crore in 2014 to Rs 44.16 lakh crore in 2023. Annual issuances of listed bonds increased from Rs 3 lakh crore in 2013 to Rs 6 lakh crore in 2022. With this growth, however, there exist multiple lacunas, which are impeding the sophisticated growth of debt market. The share of retail investors in debt market is very small as bulk of the debt is raised through private placement. It lacks transparency due to potential flaws in the credit rating process such as influencing ratings by borrowers thus making the process highly unreliable. There is also lack of liquidity due to thin market as it makes it difficult to buy and sell debt instruments quickly and efficiently. Additionally, the existing regulatory framework of the debt market is not designed in a manner to accomplish minimum cost and less time in the issuance and listing procedures. Stringent regulations have discouraged investors from investing, and to say the least, market-making has been difficult to implement. 

To resolve the above stated lacunas and boost the debt securities market, SEBI has been striving to raise the monetary threshold, which requires large corporations to raise at least 25% of their incremental borrowings through corporate bonds during a consecutive three-year period. Further, it has introduced settlement through delivery versus payment method that guarantees transfer of securities only after payment has been made. To improve transparency, it was mandated that all trades in the securities debt instruments shall be reported on the trade reporting platform of the stock exchanges. To make the process of issuing securities smooth SEBI introduced electronic book platform through which investors can place multiple bids in a private placement on debt basis. A novel idea for fast-track public debt securities issuance has been put out in the consultation paper, allowing regular issuers to issue debt securities publicly in less time, money, and effort. 

Proposals of the Consultation paper and its implications  

One of the major proposals of the consultation paper is reducing the minimum face value for non-convertible securities (NCS) and non-convertible redeemable preference shares (NCRPS) to Rs 10,000 as opposed to Rs 1 lakh earlier. However, it is mandatory for the issuer to appoint a merchant banker for carrying out due diligence of such securities. Such a step would promote investments by non-institutional investors and make the debt securities market more accessible for them. In pursuant to this, SEBI witnessed an increase in the participation of non-institutional investors. 

To make the regulatory procedure more efficient and cost-friendly, the proposal provides that the financial statements should be accessible through a QR code, which will directly lead to the audited financial statements on the stock exchange’s website. As the LODR Regulations requires financial results to be submitted to stock exchanges within 30 minutes of the board meeting and immediate online publication is accessible, discretion has also been given to publish the financial results in the newspaper, which was earlier necessary. The timeline for listing fast-track issue of debt securities has been proposed to be T+3 instead of T+6 for a regular public issue. This step to a larger extent will reduce the time for raising funds. To inculcate more consistency and harmonization, the format of the due diligence certificate has been modified with formats of the certificate for equity issuances.  

The consultation paper has also proposed to abolish the requirement of minimum subscription for banks and financial institutions, which will help them to generate more funds for their functioning. In the year 2023, SEBI introduced the concepts of General Information Document (GID) and Key Information Document (KID) for filing only necessary and required information. In the event of a subsequent NCS issuance, KID will take the place of the shelf placement memorandum, whereas GID will replace it during the original NCS issuance. These concepts were, however, first limited to the private placement issuance of NCS. At present, they have also been extended to public issuance of securities. These documents containing disclosures in the NCS regulations, information on key developments, and details of debt securities will aid the fast-track issuance of securities. They will reduce the complexity in disclosure requirements and only material information conveyed to the investors through them.  

The above-mentioned changes are likely to reduce the time and cost involved in fast-track public issues of debt securities. Keeping in mind the limitations of the retail investors, necessary changes have been proposed in the debt securities regime. Approximately 95% of the issuers opt for private placement to meet their debt fund requirements, making debt securities a viable option for retail investors will promote ease of doing business in the country.   

Limits of the Proposal and Recommendations 

The proposed amendments to the SEBI regulations have both advantages and limits. One issue is the risk of disproportionate information transmission among issuers and investors due to smooth disclosure and compliance requirements in fast-track public issues. This could lead to incomplete disclosures, affecting investor decision-making. Additionally, the reduction in due-diligence requirements could result in missing critical financial health information and potential red flags. To address this, clarity in materiality guidelines and disclosure standards is needed, along with a robust enforcement mechanism by SEBI and the stock exchange. Additionally, streamlining compliance and regulatory requirements may limit investor access to updated information about issuers and debt securities, limiting their rights in case of default. As the retention limit of the subscription is fixed up to five times the size of the base issue it might discourage investors from participating in the initial offering. It also possesses a threat of market manipulation. If a large portion of debt securities are held by the issuer for longer period it could artificially inflate the market price potentially misleading the true picture of market price.  

The proposals in the consultation paper could be strengthened by some important recommendations. Firstly, there needs to be a clarity in the materiality and disclosure standards in the fast-track public issues with the implementation of a better mechanism by the SEBI. Secondly, their needs to be a proper grievance redressal mechanism for streamlining the investor’s access to the latest update in the debt securities market. Lastly, to avoid manipulation methods to determine retention limit and adequate disclosure requirement should be established. With these recommendations, the authors aim to enforce some essential amendments to the proposals, which will help in establishing a regulatory framework that ensures growth and sustainability in the debt securities market in India.   


The consultation paper issued by SEBI has introduced some significant forward-looking proposals, which is a welcome step towards an efficient debt securities market in India. The proposals possess a few challenges and reveal potential risks of market manipulation and investor protection, which can be overcome by adopting clear materiality guidelines and disclosure standards. This will ensure an effective monitoring mechanism by SEBI and prove to be a game-changer for the debt securities market. Across the world, most of the developed nations are using the bond market as their main source of financing. For India too, which is now one of the fastest-growing nations, it has become important and essential to diversify the financing options of the borrowers. The recommendations can prove to be an effective step towards revolutionising the global debt securities market. 

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