Description

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

Summary

SEBI has issued a circular (HO/17/11/24(1)2026-DDHS-POD1/I/5967/2026) dated February 27, 2026, revising 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 requirements for green debt securities with those already applicable to 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 and replaced with a new standalone Paragraph 5 on independent third-party reviewer/certifier requirements.
  • The independent third-party reviewer/certifier must ascertain that the issuance of green debt securities complies with Regulation 2(1)(q) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
  • 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 demonstrated expertise in assessing ESG debt securities.
  • The scope of review conducted by the independent third-party reviewer/certifier must be disclosed in the offer document.
  • This circular applies to all issuers of listed/proposed-to-be-listed green debt securities, stock exchanges, depositories, merchant bankers, debenture trustees, credit rating agencies, and ESG ratings providers.

Regulatory Changes

  • Deletion: Paragraph 1.8 of Chapter IX of the NCS Master Circular (previously governing third-party reviewer appointment for green debt securities) is deleted.
  • Insertion: A new Paragraph 5 titled “Independent third-party reviewer/certifier” is inserted in Chapter IX of the NCS Master Circular, consolidating and aligning requirements with those applicable to social bonds/sustainability bonds under the SEBI circular dated June 05, 2025.
  • The revised framework is part of SEBI’s broader expansion of sustainable finance to include ESG Debt Securities (green, social, sustainability, and sustainability-linked bonds) following the amendment notification dated December 11, 2024.

Compliance Requirements

  • Issuers of green debt securities must appoint an independent third-party reviewer/certifier satisfying the conditions of independence, conflict-free remuneration, and ESG expertise.
  • The reviewer must cover review/certification of processes including project evaluation, selection criteria, and project categories eligible for financing under green debt security.
  • The scope of all reviews must be explicitly stated in the offer document.
  • Stock Exchanges, Depositories, Merchant Bankers, Debenture Trustees, Credit Rating Agencies, and ESG Ratings Providers must ensure adherence to these revised norms in their respective roles.

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 Operational Framework Circular: June 05, 2025
  • SEBI Amendment Notification (ESG Debt expansion): December 11, 2024

Impact Assessment

This circular has a moderate compliance impact on participants in the green debt securities market. It harmonises the reviewer/certifier appointment framework across all ESG Debt Securities categories, reducing regulatory inconsistency. Existing issuers will need to review their third-party reviewer arrangements to ensure alignment with the new conditions (independence, remuneration structure, ESG expertise). The requirement to disclose the scope of review in the offer document adds a documentation obligation. Overall, the change is procedural and aligns with SEBI’s broader push to standardise and strengthen the ESG debt securities market in India.

Impact Justification

Affects issuers of green debt securities, merchant bankers, debenture trustees, and ESG ratings providers by modifying reviewer/certifier appointment norms, but is an alignment/harmonisation measure rather than a major new obligation.