SEBI has introduced a colour-coded 'Credit Risk-o-Meter' that issuers of debt securities and Online Bond Platform Providers (OBPPs) must show to investors. It applies to listed and proposed-to-be-listed debt instruments, whether issued publicly or by private placement. The circular dated October 7, 2026 comes into force after 45 days from the date of issuance.
- Credit Risk-o-Meter is mandatory in the offer document, Abridged Prospectus, Private Placement Memorandum, all advertisements of issuers/OBPPs and OBPP web and mobile platforms.
- Existing credit ratings (AAA to D) are mapped to six risk levels, each with a fixed colour.
- Name of the credit rating agency, the actual rating and, for unsecured debt, the word 'unsecured' in bold red must appear below the meter.
- Where there are multiple ratings, the meter reflects the lowest rating.
- OBPPs must update the meter within 24 hours of a rating change intimation from NSDL/CDSL and may not override classifications manually.
What has changed
SEBI wants investors to see credit risk at a glance before investing. For this, a pictorial 'Credit Risk-o-Meter' becomes a mandatory part of the offer document, Abridged Prospectus, Private Placement Memorandum, all advertisements of issuers and Online Bond Platform Providers (OBPPs), and the web and mobile platforms of OBPPs. A new Chapter II-C is inserted in the NCS Master Circular dated October 15, 2025, and Clause 14 is added to Annexure-XXIB of Chapter XXI (minimum disclosures for securities offered on an online bond platform).
Who is covered
All listed and proposed-to-be-listed Non-Convertible Securities (NCS), Commercial Papers (CPs), Securitised Debt Instruments (SDIs), Security Receipts (SRs) and Structured Debt / Market Linked Debentures (MLDs), whether by public issue or private placement.
How the meter works
The meter maps SEBI's existing rating symbols to six levels: lowest credit risk (AAA, short term A1+), very low (AA+ to AA-, A1), low (A+ to A-, A2), moderate (BBB+ to BBB-, A3), moderate risk of default (BB+ to BB-, A4+), and high to very high risk of default (B+ to D, A4/D). Colours run from green to red. Below the meter, the credit rating agency's name and the actual rating must be given in text. Unsecured instruments must carry the word 'unsecured' in bold red. With multiple ratings, the meter shows the lowest, though all may be disclosed. If a rating agency marks the issuer as 'Not Cooperating' (INC), the meter must point to INC and the text must say so.
Disclaimers
A prescribed disclaimer must appear below the meter, stating that it reflects issuer credit risk only and is not investment advice. For unsecured perpetual bonds such as AT1 bonds, a separate disclaimer warns of the risk of total loss of capital.
Extra duties for OBPPs
- Show the meter on the bond listing and details page, before the investment buttons.
- Update it within 24 hours of a rating change intimation from NSDL/CDSL; changes must be communicated on the platform.
- Use ratings only from SEBI-registered CRAs, through an automated system, with no manual overrides, and keep audit trails.
- In monochrome advertisements, add a QR code leading to the colour version.
Stock exchanges and depositories must put systems in place and inform issuers.
- OBPP
- Online Bond Platform Provider - an entity operating a platform for offering bonds online
- CRA
- Credit Rating Agency registered with SEBI
- NCS
- Non-Convertible Securities, such as non-convertible debentures
- INC
- 'Issuer Not Cooperating' - a status given by a CRA when the issuer does not provide information
- AT1 bonds
- Unsecured perpetual bonds with special structural risks, including possible total loss
This update summarises an official document for general information. It is not legal advice; please consult us before acting on it.