SEBI Lowers Debt Investment To Rs 10,000 For Retail Investors

The Securities and Exchange Board of India has drastically reduced the ticket size or the face value of debt securities from Rs 1 lakh to Rs 10,000. This is likely to boost participation of retail investors in the corporate bond market.

Market participants desired lower ticket size of debt securities, which would encourage more non-institutional investors to participate in the corporate bond market and lead to more liquidity, the regulator said.

Companies will now be able to issue debt security or non-convertible redeemable preference shares on private placement basis at a face value of Rs 10,000, according to a circular issued on Wednesday.   

The revision would be subject to certain conditions, like the issuer should appoint at least one merchant banker, and non-convertible debentures and non-convertible redeemable preference shares be plain vanilla, interest or dividend-bearing instruments. 

Credit enhancements would be permitted in such instruments, SEBI said.

With respect to General Information Document, which is valid as on the 'effective date of the circular', SEBI said the issuer may raise funds through tranche placement memorandum or Key Information Document at a face value at Rs 10,000, provided at least one merchant banker is appointed to carry out due diligence in respect of such issuances.

"Necessary addendum shall be issued by such issuer to the shelf placement memorandum or General Information Document, as applicable," the circular said.

In October 2022, SEBI reduced the face value of corporate bonds to Rs 1 lakh from Rs 10 lakh.