Sebi Slashes Debt Security Face Value to Rs 10,000 to Boost Retail Investor Participation

The Securities and Exchange Board of India (Sebi) has reduced the face value of debt securities from Rs 1 lakh to Rs 10,000 to encourage retail investors' participation in the corporate bond market. The move aims to increase liquidity and includes conditions like appointing a merchant banker.

The Securities and Exchange Board of India (Sebi) announced a significant policy change on Wednesday, cutting the face value of debt securities from Rs 1 lakh to Rs 10,000 in an effort to lure more retail investors into the corporate bond market.

Many market experts believe that the reduced ticket size will invite a greater number of non-institutional investors, thereby boosting market liquidity. Sebi's circular also highlighted that issuers could now offer debt securities or non-convertible redeemable preference shares on a private placement basis at the new face value, subject to specific conditions such as appointing a merchant banker and ensuring the instruments are plain vanilla, interest, or dividend-bearing.

Furthermore, Sebi stated that credit enhancements would be allowed for these instruments. The circular also mentioned that issuers could utilize a General Information Document (GID) valid as of the circular's 'effective date' to raise funds through a tranche placement memorandum at the new face value, given that at least one merchant banker is designated for due diligence.

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