Description

SEBI modifies Chapter IX of the NCS Master Circular to align appointment requirements for independent third-party reviewer/certifier for green debt securities with those for social bonds and sustainability bonds.

Summary

SEBI has issued this circular (ref. HO/17/11/24(1)2026-DDHS-POD1/I/5967/2026, dated February 27, 2026) to revise the norms for appointment of an independent third-party reviewer/certifier for green debt securities. The changes modify Chapter IX of the NCS Master Circular to harmonise green debt security requirements with those already prescribed for social bonds, sustainability bonds, and sustainability-linked bonds under the June 05, 2025 circular.

Key Points

  • Paragraph 1.8 of Chapter IX of the NCS Master Circular is deleted.
  • A new “Paragraph 5” is inserted in Chapter IX detailing independent third-party reviewer/certifier requirements for green debt securities.
  • The reviewer must be independent of the issuer, its directors, senior management, and key managerial personnel.
  • The reviewer must be remunerated in a manner that prevents conflicts of interest.
  • The reviewer must have expertise in assessing ESG debt securities.
  • The scope of review(s) must be specified in the offer document.
  • Alignment is achieved with the June 05, 2025 framework for other ESG Debt Securities (social bonds, sustainability bonds, sustainability-linked bonds).

Regulatory Changes

  • Deletion: Paragraph 1.8 of Chapter IX of the NCS Master Circular (SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/0000000137, dated October 15, 2025) is removed.
  • Insertion: New Paragraph 5 in Chapter IX prescribes conditions for appointment of an independent third-party reviewer/certifier for green debt securities, covering independence, remuneration, and expertise requirements.
  • Background: SEBI expanded sustainable finance scope in December 2024 to include social bonds, sustainability bonds, and sustainability-linked bonds under the ESG Debt Securities umbrella; this circular aligns the green debt framework with that expansion.

Compliance Requirements

  • Issuers of green debt securities must appoint an independent third-party reviewer/certifier to verify that the issuance complies with Regulation 2(1)(q) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
  • The reviewer/certifier must review/certify processes including project evaluation, selection criteria, and eligible project categories.
  • The scope of review must be disclosed in the offer document.
  • Applicable entities: Issuers of listed/proposed-to-be-listed green debt securities, recognized stock exchanges, recognized depositories, registered merchant bankers, registered debenture trustees, registered credit rating agencies, and registered ESG ratings providers.

Important Dates

  • Circular Date: February 27, 2026
  • Reference Circular (Green Debt Framework): February 06, 2023 (SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/023)
  • NCS Master Circular: October 15, 2025 (SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/0000000137)
  • ESG Debt Securities Expansion Notification: December 11, 2024
  • ESG Debt Securities Operational Framework Circular: June 05, 2025
  • No specific prospective effective date mentioned; amendments apply upon issuance.

Impact Assessment

This circular has a moderate impact on participants in the green debt securities market. It standardises and harmonises the third-party reviewer/certifier framework across all ESG Debt Securities categories, reducing regulatory inconsistency. Issuers of green debt securities will need to ensure their reviewer appointment processes and offer document disclosures conform to the revised requirements under the new Paragraph 5. The change is largely structural—aligning existing practice with a consolidated framework—rather than introducing materially new burdens. ESG ratings providers, debenture trustees, and merchant bankers involved in green debt issuances should review their onboarding and due diligence processes to confirm compliance with the independence, remuneration, and expertise conditions.

Impact Justification

Regulatory alignment of reviewer/certifier appointment norms across ESG debt securities categories; affects issuers, merchant bankers, debenture trustees, and ESG rating providers but does not introduce entirely new requirements.