Archive · 7 Oct 2026
SEBI Eases Merchant Banker Rule for Eligible Private Debt Issuers
SEBI has changed a rule for some companies that want to raise money by selling debt privately.
In the past, these issuers generally had to hire a merchant banker.
Now, some listed and financially regulated issuers can skip that step if they meet strict conditions.
They must have been listed for at least a year and have no specified unpaid penalties or recent repayment defaults.
Their debt must usually be senior, secured, and rated AA- or higher.
Some public-sector issuers can issue unsecured debt under this exemption.
Stock exchanges will check whether issuers qualify.
The change applies immediately and is intended to make issuing debt easier and expand access to highly rated securities.
SEBI now lets qualifying listed issuers skip appointing a merchant banker for certain private-placement debt issues.
The issuer must be regulated by SEBI, RBI, IRDAI or PFRDA and listed for at least one year.
Eligible issuers must have no pending listing-related fines and no defaults during the previous three financial years or current financial year.
Debt must generally be senior and secured by a first or pari passu charge, and rated at least AA-; the lowest rating applies if multiple ratings exist.
The exemption took effect immediately under a circular dated October 7; stock exchanges will check eligibility and set operational requirements.
- Who
- SEBI and eligible listed issuers raising private-placement debt.
- What
- SEBI eased the requirement to appoint a merchant banker for qualifying debt issues.
- When
- Effective immediately; the circular is dated October 7.
- Where
- India.
- Why
- To make debt issuance easier and widen access to high-rated securities.
Policy rationale
Safeguards and conditions
Simplifying private debt issuance
Policy rationale
SEBI says the change is intended to promote ease of issuance and widen access to high-rated debt securities.
Safeguards and conditions
The exemption is limited to issuers meeting specified regulatory, listing, compliance, repayment, security and credit-rating criteria.
- Eligible issuers
- Must be regulated by SEBI, the Reserve Bank of India, IRDAI or PFRDA.
- Listing history
- At least one year on a recognised stock exchange.
- Compliance
- No pending SEBI or stock-exchange fines or penalties for applicable listing-regulation violations.
- Repayment record
- No defaults in the previous three financial years or current financial year on specified debt, preference-share, securitised debt, commercial paper, deposit or loan obligations.
- Security
- Generally senior or unsubordinated, secured by a first or pari passu charge on identifiable issuer assets.
- Public-sector exception
- Central Public Sector Enterprises, PSUs and statutory bodies may issue secured or unsecured securities.
- Minimum credit rating
- AA- at issuance; the lowest rating is used if the issue has multiple ratings.
- Verification
- A statutory auditor's certificate is required for the repayment record, and stock exchanges confirm eligibility at in-principle approval.