Sebi allows debt issuers to offer incentives to boost retail participation

The Securities and Exchange Board of India (Sebi) has approved amendments to the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, allowing issuers of debt securities to offer incentives to select categories of investors in public issues. The move is aimed at encouraging participation by retail investors in the corporate debt market and also promoting public issuances in the debt market.

“The board has permitted debt issuers to offer incentives in public issues to certain categories of investors,” Sebi said in a release after its meeting on December 17.

At present, issuers are not permitted to provide any incentives for subscribing to debt securities, except for fees or commissions paid for services rendered in connection with the issue. With the approved amendment, issuers will be allowed to extend incentives in the form of additional interest or a discount on the issue price.

As per the release, the incentives may be offered to specified categories of investors, including senior citizens, women, armed forces personnel—both serving and retired—as well as widows and widowers of such personnel, retail individual investors, or any other category that may be specified by Sebi from time to time. The incentive will be available only to the initial allottee and will not apply if the debt securities are transferred or transmitted after allotment.

“Such incentive shall be available to the initial allottee only and shall not be available in case the debt securities are transferred/transmitted post allotment,” the release noted.

Sebi said the move is aimed at enhancing retail participation in the corporate debt market and encouraging public issuances of debt securities.

The proposal was finalised following a public consultation initiated through a consultation paper issued on October 27, 2025, and based on the recommendations of Sebi’s Corporate Bonds and Securitization Advisory Committee.

Among others, Sebi unveiled a sweeping set of regulatory reforms across stock broking, mutual funds, IPOs, corporate bonds and governance norms. These changes are aimed at signalling a major shift towards simplification, investor participation and ease of doing business. The key initiatives approved by the regulator range from rewriting decades-old broker and mutual fund rules to cutting costs for investors and easing IPO disclosures for companies. The regulator has also allowed incentives in debt issues and unclogged long-pending physical share transfers.