Sebi mulls incentives for select investors in debt public issues

Issuers may offer higher coupon rates or price discounts to retail, women, senior citizens, and armed forces personnel under Sebi's proposal to deepen market participation

The Securities and Exchange Board of India (Sebi) on Monday proposed allowing debt issuers to offer incentives to specific categories of investors in public issues, as part of efforts to deepen participation and revive interest in the debt market.

 

The proposal aims to encourage broader retail involvement and reinvigorate fundraising through public bond offerings, which have seen a sharp slowdown.

 

According to Sebi data, funds raised via public debt issues dropped from ₹19,168 crore in 2023-24 (FY24) to ₹8,149 crore in FY25 — a decline reflecting subdued investor appetite.

 

Under the proposed framework, issuers may extend incentives such as a higher coupon rate or a discount on the issue price to certain investor classes, including retail subscribers, senior citizens, women, and armed forces personnel.

 

 

The incentives would be designed to attract individuals while also boosting the number of public debt issuances.

 

Sebi has clarified that any higher coupon rate would apply only to the initial allottee and would lapse in case of transfer or transmission of the bonds.

 

The decision to offer such incentives would rest solely with the issuer and must be disclosed upfront in the offer document.

 

The proposal draws parallels with existing practices in other investment segments.

 

For instance, in an offer for sale (OFS) by promoters through stock exchanges, issuers are permitted to extend discounts to retail investors, provided the details are disclosed in advance.

 

Similarly, banks often offer higher fixed deposit rates to senior citizens while some non-banking financial companies (NBFCs) provide marginally better returns to women depositors.