SEBI Exempts Certain Listed Issuers from Mandatory Merchant Banker Appointment for Private Placement of Debt: A Regulatory Update

Introduction

The Securities and Exchange Board of India (“SEBI”) has relaxed the requirement to appoint a merchant banker for certain private placements of debt by way of a circular HO/17/11/24(7)2026-DDHS-POD1/I/23122/2026 dated October 07, 2026,(the “Circular”) which replaced Paragraph 1.3 of Chapter V of the 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”). The Circular is effective immediately.

Explanation

Under the earlier framework, an issuer making a private placement of debt securities or non-convertible redeemable preference shares at a face value of ₹10,000 was required to appoint at least one merchant banker, whose role and responsibilities were similar to those in a public issue. SEBI had consulted on the exemption in August 2026, noting that market participants considered the requirement a disproportionate cost burden, and that limited availability of merchant bankers in the debt segment could delay placements.

The exemption is narrow in two respects. First, issuers outside the eligible categories, or whose paper falls below the rating threshold, derive no benefit. Second, dispensing with a merchant banker does not dispense with the other requirements of the NCS Master Circular, which remain unchanged. On the same date, SEBI also issued separate circulars on ISIN limits for privately placed debt and on a Credit Risk Meter for listed debt securities, which issuers should read alongside this circular.

Conclusion

The circular reduces cost and execution time for well-rated, regulated and listed issuers, and reflects SEBI’s stated aim of easing debt issuance while widening access to high-rated securities. Because eligibility turns on several cumulative conditions, issuers should test each proposed placement against the full text of the circular, and watch for the operational requirements to be prescribed by the stock exchanges, before proceeding without a merchant banker.

Last Updated on 30 October, 2026