Description

SEBI introduces amendments allowing issuers to offer incentives such as additional interest or discount pricing to retail individual investors, senior citizens, women, serving/retired defense personnel, and widows/widowers of deceased servicemen for non-convertible debt securities.

Summary

SEBI has notified the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities)(Amendment) Regulations, 2026, effective from January 20, 2026. The key amendment allows issuers of non-convertible debt securities to offer incentives to specific categories of investors including retail individual investors, senior citizens, women, serving and retired defense personnel, and widows/widowers of deceased servicemen. These incentives may include additional interest or the option to purchase securities at a discount to the issue price.

Key Points

  • New definition added for “Retail Individual Investor” as an investor who applies or bids for debt securities up to a value of Rs. 2 lakh
  • Issuers can now offer incentives (additional interest or discount pricing) to eligible investor categories
  • Eligible categories: senior citizens, women, serving/retired defense personnel, widows/widowers of deceased servicemen, retail individual investors, and other categories as specified by SEBI
  • Incentives are only applicable to first-time allottees; not available upon transfer or transmission of securities after allotment
  • Amendment to Regulation 31 of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
  • Notification published in the Official Gazette on January 20, 2026

Regulatory Changes

Amendment to Regulation 2(1): Addition of new clause (छछक) defining “Retail Individual Investor” as an investor applying or bidding for debt securities with value up to Rs. 2 lakh.

Amendment to Regulation 31: Addition of two provisos allowing:

  1. Issuers to offer incentives (additional interest or discount to issue price) to specified investor categories without restriction from other provisions of the regulation
  2. Restriction that incentives are only available to first allottees and cease to apply upon transfer or transmission of the debt securities

Compliance Requirements

  • Issuers of non-convertible debt securities may voluntarily adopt incentive structures for eligible investor categories
  • If incentives are offered, they must comply with the conditions that incentives are only for first-time allottees
  • Issuers must ensure proper identification and verification of eligible investor categories (senior citizens, women, defense personnel, etc.)
  • Documentation and disclosure requirements for incentive structures must be followed as per existing SEBI regulations
  • Post-allotment transfers or transmissions should not carry forward the incentive benefits

Important Dates

  • January 20, 2026: Notification published in the Official Gazette
  • January 20, 2026: Effective date of the amendments
  • February 3, 2026: BSE circular issued communicating the SEBI notification

Impact Assessment

Market Impact: This amendment is expected to encourage greater retail participation in the debt securities market by making non-convertible securities more attractive to retail individual investors and other specified categories through incentive structures.

Issuer Impact: Companies issuing debt securities now have flexibility to structure offerings with differentiated pricing or returns for specific investor segments, potentially broadening their investor base and improving subscription rates.

Investor Impact: Retail investors, senior citizens, women, and defense personnel can potentially receive better returns or pricing on debt securities, making these instruments more competitive compared to traditional fixed-income products.

Regulatory Intent: The amendment aligns with SEBI’s objective of democratizing access to capital markets and providing special consideration to specific investor segments that may benefit from additional financial support or recognition.

Impact Justification

Regulatory amendment enabling issuers to provide incentives to specific investor categories for non-convertible debt securities, potentially increasing retail participation in debt markets