Description

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

Summary

SEBI has issued a circular dated February 27, 2026 (Ref. HO/17/11/24(1)2026-DDHS-POD1/I/5967/2026) revising the norms for appointment of an independent third-party reviewer/certifier for green debt securities. The revision modifies Chapter IX of the NCS Master Circular to harmonize requirements for green debt securities with those already applicable to social bonds, sustainability bonds, and sustainability-linked bonds under the ESG Debt Securities framework introduced via the June 05, 2025 circular.

Key Points

  • SEBI deletes Paragraph 1.8 of Chapter IX of the NCS Master Circular, which previously governed third-party reviewer/certifier requirements for green debt securities.
  • A new “Paragraph 5” is inserted into Chapter IX of the NCS Master Circular, consolidating and standardizing third-party reviewer/certifier requirements.
  • The new paragraph mandates that the independent reviewer/certifier confirm the issuance is in accordance with Regulation 2(1)(q) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
  • The scope of green debt securities now sits within the broader ESG Debt Securities framework, alongside social bonds, sustainability bonds, and sustainability-linked bonds (per December 11, 2024 amendment notification).
  • The circular is addressed to issuers of listed/proposed-to-be-listed green debt securities, recognized 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 (SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/0000000137 dated October 15, 2025) is deleted in its entirety.

Insertion: New Paragraph 5 — “Independent third-party reviewer/certifier” — is added to Chapter IX of the NCS Master Circular, with the following key provisions:

  • Paragraph 5.1: The issuer must appoint an independent third-party reviewer/certifier to ascertain that the issuance complies with the green debt security definition under Regulation 2(1)(q), including review/certification of processes such as project evaluation and selection criteria, and eligible project categories. Conditions:
    • (a) The reviewer must be independent of the issuer, its directors, senior management, and key managerial personnel.
    • (b) The reviewer must be remunerated in a manner that prevents conflicts of interest.
    • (c) The reviewer must have expertise in assessing ESG debt securities.
  • Paragraph 5.2: The scope of review(s) conducted by the independent third-party reviewer/certifier must be specified in the offer document.
  • Paragraph 5.3: (Content truncated in source; full details available in the official PDF.)

Compliance Requirements

  • Issuers of Green Debt Securities: Must appoint an independent third-party reviewer/certifier meeting the independence, conflict-of-interest, and expertise criteria outlined in new Paragraph 5.1 before issuance. The scope of review must be disclosed in the offer document.
  • Merchant Bankers/Debenture Trustees: Should update due diligence processes and offer document templates to reflect the new reviewer/certifier disclosure requirement.
  • Stock Exchanges and Depositories: Must update listing compliance frameworks to reflect the deletion of Paragraph 1.8 and the insertion of the new Paragraph 5.
  • Credit Rating Agencies and ESG Ratings Providers: Should be aware of the revised standards governing reviewer independence and expertise as part of the ESG debt securities ecosystem.

Important Dates

  • Circular Date: February 27, 2026
  • Applicable Framework Reference: NCS Master Circular dated October 15, 2025 (SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/0000000137)
  • Prior Green Debt Circular: February 06, 2023 (SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/023), applicable from April 01, 2023
  • ESG Debt Securities Expansion: December 11, 2024 (amendment notification)
  • ESG Debt Securities Operational Framework: June 05, 2025 (social bonds, sustainability bonds, sustainability-linked bonds)
  • No explicit effective date stated in the available text; the circular is presumed effective from the date of issue.

Impact Assessment

Market Impact (Medium): This circular does not introduce entirely new obligations but harmonizes existing green debt security requirements with the broader ESG Debt Securities framework. Issuers already complying with the June 2025 ESG operational framework will find the alignment incremental.

Operational Impact (Medium): Issuers who have previously relied on Paragraph 1.8 for third-party reviewer/certifier appointments will need to update their processes to reflect the new Paragraph 5 criteria, particularly around reviewer independence, remuneration structures, and expertise verification. Offer document templates will require revision to include the scope of review.

Stakeholder Impact: Primarily affects debt capital market participants — green bond issuers, merchant bankers structuring ESG debt issuances, debenture trustees, and ESG ratings/review firms. Equity markets and general trading operations are not impacted.

Regulatory Trajectory: This circular reflects SEBI’s ongoing effort to build a unified and consistent ESG debt securities regulatory framework in India, progressively aligning domestic standards with international sustainable finance best practices.

Impact Justification

Technical alignment of existing green debt security reviewer requirements with recently introduced ESG debt security norms; affects a specific segment of debt market participants rather than broad equity markets.