Key Details
SEBI’s 7 October 2026 circular makes the Credit Risk-o-Meter a mandatory disclosure for listed and proposed-to-be-listed debt securities, whether offered publicly or through private placement.
Where it appears: Offer documents, abridged prospectuses, private-placement memoranda, issuer and online bond-platform advertisements, and online bond-platform websites and apps.
What it shows: Six colour-coded levels map existing credit ratings—from AAA at the lowest credit-risk levelto B, C and D ratings at the highest level. The actual rating and the rating agency’s name must also appear.
Additional warnings: The label must identify an unsecured instrument. If agencies give different ratings, the meter must use the lowest one; it must also flag when a rating agency says the issuer is “not cooperating”.
When it applies: The circular comes into force 45 days after its issue. Online bond platforms must update the meter within 24 hours of receiving notice of a rating change through the specified depository process.
Credit Ratings Will Be Harder to Miss
A bond’s credit rating indicates an assessment of the risk that its issuer may fail to meet its payment obligations. SEBI’s new Credit Risk-o-Meter converts that rating into a standard visual scale placed where investors encounter a security—including before the investment buttons on online bond platforms.
The requirement covers more than conventional bonds. It also applies to listed or proposed-to-be-listed commercial paper, securitised debt instruments, security receipts and market-linked debentures. Issuers and platforms must display the underlying rating in text, so the colour does not replace the information on which it is based.
The Meter Does Not Capture Every Way an Investor Can Lose Money
The circular requires a warning that the meter represents credit risk, not investment advice. A debt security can also lose value because of market movements or be difficult to sell when an investor needs cash.
SEBI requires a further warning for unsecured perpetual bonds, including Additional Tier 1 bonds: their structural features can expose investors to a total loss of capital that the credit-risk colour alone does not convey. This distinction is essential to reading the new label correctly.
Policy Relevance
Investor comparison: A consistent visual scale could make credit ratings easier to notice and compare across documents, advertisements and bond platforms.
Disclosure quality: Showing the actual rating, lowest rating where several exist, unsecured status and non-cooperation flag reduces the risk that a favourable-looking colour obscures material information.
Platform responsibility: The value of the label depends on online bond platforms updating it promptly when ratings change and keeping the accompanying warnings visible—not treating the meter as a substitute for reading the security’s terms.
Relevant Question for Policy Stakeholders: Will the new label help investors identify credit risk without mistaking it for an overall safety rating, particularly for unsecured and structurally complex bonds?
Follow the Full Circular Here: SEBI, Introduction of Credit Risk-o-Meter as an Additional Disclosure Mechanism for Debt Securities