Description
SEBI introduces incentive provisions for retail individual investors, senior citizens, women, serving and retired armed forces personnel in non-convertible securities issuances.
Summary
SEBI has amended the Issue and Listing of Non-Convertible Securities Regulations, 2021 through notification dated January 20, 2026. The key amendment allows issuers to offer incentives to specific categories of investors including retail individual investors, senior citizens, women, serving and retired armed forces personnel and widows/spouses of deceased armed forces personnel. The regulations define retail individual investors as those applying for debt securities up to Rs. 2 lakh.
Key Points
- New definition introduced: “Retail Individual Investor” means an investor who applies or bids for debt securities up to a value of Rs. 2 lakh
- Issuers can now offer incentives such as additional interest or discount to issue price to specified investor categories
- Eligible categories: senior citizens, women, serving and retired armed forces personnel, widows/spouses of deceased armed forces personnel, retail individual investors (who are individuals), and other investor categories as specified by SEBI
- Incentives are only available at initial allotment stage
- Once debt securities are transferred or transmitted post-allotment, the incentive benefits cease
- Amendment comes into force from the date of publication in the Official Gazette
Regulatory Changes
Amendment to Regulation 2(1): A new clause (छछक) has been inserted defining “Retail Individual Investor” as an investor who applies or bids for debt securities with a value up to Rs. 2 lakh.
Amendment to Regulation 31: Two provisos have been added:
- First proviso permits issuers to offer incentives (such as additional interest or option to purchase securities at discount to issue price) to specified investor categories
- Second proviso clarifies that incentives are available only on initial allotment and not upon subsequent transfer or transmission of debt securities
Compliance Requirements
- Issuers of non-convertible securities may structure their offerings to include incentive schemes for eligible investor categories
- Any incentive offerings must comply with the provisions of Regulation 31 as amended
- Incentives must be limited to initial allotment only; terms should clearly specify that benefits do not transfer on secondary transactions
- Market intermediaries and stock exchanges should update their systems and processes to accommodate differentiated pricing/terms for eligible investor categories
Important Dates
- Notification Date: January 20, 2026
- Effective Date: Date of publication in the Official Gazette (January 20, 2026)
- Gazette Reference: CG-MH-E-21012026-269490
Impact Assessment
Market Impact: This amendment is designed to increase retail participation in the debt securities market by allowing issuers to offer attractive incentives. It democratizes access to debt instruments by providing preferential terms to retail and priority investor segments.
Issuer Impact: Corporate issuers gain flexibility to design differentiated offerings that can attract retail investors and priority categories, potentially broadening their investor base and improving distribution.
Investor Impact: Retail individual investors (up to Rs. 2 lakh investment), senior citizens, women, and armed forces personnel can benefit from preferential terms such as higher interest rates or discounted issue prices when subscribing to debt securities in primary market.
Operational Impact: Market intermediaries, registrars, and stock exchanges will need to update systems to track and implement differentiated allotments and pricing for eligible categories. Clear disclosure and tracking mechanisms will be required to ensure incentives are properly applied only at initial allotment stage.
Impact Justification
Regulatory amendment enabling issuers to offer incentives to specific investor categories in debt securities, potentially increasing retail participation in debt markets.