SEBI has amended para 1.3 of Chapter V of the NCS Master Circular so that certain listed issuers need not appoint a merchant banker for private placement of debt securities or non-convertible redeemable preference shares at a face value of Rs. Ten Thousand. The relaxation applies only if five conditions are met. It is effective immediately, from October 07, 2026.
- Merchant banker appointment may be skipped for private placement of debt at face value of Rs. Ten Thousand, if all five conditions are met.
- Issuer must be regulated by SEBI, RBI, IRDAI or PFRDA, and listed for at least one year with no pending fines or penalties under the SEBI (LODR) Regulations, 2015.
- No default in the last three financial years and the current one; Statutory Auditor's certificate to be given to the Stock Exchange.
- Debt must be senior and secured (CPSEs/PSUs and Statutory Bodies may be unsecured), and rated AA- or above; lowest rating counts.
- Effective immediately; stock exchanges will specify disclosure formats.
What has changed
Earlier, para 1.3 of Chapter V of the SEBI Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated October 15, 2025 (the "NCS Master Circular") required every issuer placing debt privately at a face value of Rs. Ten Thousand to appoint at least one Merchant Banker. SEBI has now replaced para 1.3. The merchant banker remains the default, but an issuer may choose not to appoint one if it meets all the conditions below. SEBI says the change follows market feedback, to make debt issuance easier and widen retail access to high-rated securities.
Conditions for skipping the merchant banker
- Regulated issuer: registered or regulated by SEBI, RBI, IRDAI or PFRDA.
- Listing record: listed in any segment of a recognised Stock Exchange for at least one year, with no pending fines or penalties from SEBI or the Stock Exchanges for non-compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Stock Exchange confirms this when granting in-principle approval.
- No default: no default in the last three financial years and the current financial year in redemption, repayment, interest or dividend on its debt securities, non-convertible redeemable preference shares, securitised debt instruments, commercial papers, deposits or loans. The issuer submits a certificate from its Statutory Auditor to the Stock Exchange.
- Security and ranking: the debt must be unsubordinated/senior and secured by a first or pari passu charge on identifiable assets. For Central Public Sector Enterprises (CPSEs), Public Sector Undertakings (PSUs) and Statutory Bodies, it may be secured or unsecured.
- Rating: at least AA- on the date of private placement. If there are multiple ratings, the lowest one decides eligibility.
Other points
Stock Exchanges will specify the disclosure formats and submissions needed to show compliance. All other provisions of Chapter V stay unchanged. The circular applies with immediate effect and is issued under Section 11(1) of the SEBI Act, 1992 read with Regulation 55(1) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
- Merchant Banker
- A SEBI-registered intermediary that manages and carries out due diligence on securities issues
- Private placement
- Offering securities to a select group of investors rather than to the general public
- Pari passu charge
- A charge on assets shared equally with other lenders of the same rank
- Unsubordinated/senior debt
- Debt that is repaid ahead of subordinated debt if the issuer is wound up
- CPSE/PSU
- Central Public Sector Enterprise / Public Sector Undertaking, i.e. government-owned companies
This update summarises an official document for general information. It is not legal advice; please consult us before acting on it.