SEBI Pushes to Help Senior Citizens and Women Earn More by Investing in Corporate Bonds
SDG 9: Industry, Innovation and Infrastructure | SDG 8: Decent Work and Economic Growth
Institutions: Securities and Exchange Board of India (SEBI) | Ministry of Finance
The Securities and Exchange Board of India (SEBI) has issued a consultation paper proposing a major rule change to revive India’s slowing corporate bond market and boost retail participation. The proposal seeks to amend Regulation 31 of the NCS Regulations, which currently prohibits companies from offering any incentives in public debt issues.
The proposed amendment would allow debt issuers (companies raising money through bonds) to offer specific incentives to certain categories of investors at their discretion. These incentives, which must be clearly disclosed upfront in the offer document, would be limited to the original allottees and would not transfer if the bonds are sold later.
The incentives would take two forms:
Higher Coupon Rate: A slightly higher interest rate on the bond.
Discount to the Issue Price: Allowing specific investors to buy the bond at a lower price.
The target categories for these preferential benefits include: senior citizens, women, armed forces personnel (serving and ex-servicemen/widows), and retail subscribers (small investors). This move comes after observing a sharp decline in public debt issues, which dropped from ₹19,168 crore in FY 2023-24 to ₹8,149 crore in FY 2024-25.
The proposal is a pragmatic step toward achieving SEBI’s dual objective of making the bond market more competitive for retail investors and encouraging companies to raise capital through public issuance rather than relying solely on bank loans. By promoting participation from socially relevant groups, it helps democratize the debt market and provide safer, accessible investment avenues for the general public.
What is a Coupon Rate in the Bond Market?→ The Coupon Rate is simply the annual interest rate paid by the bond issuer (the company) to the bondholder (the investor). A higher coupon rate makes a bond a more attractive investment. SEBI’s proposal allows companies to offer a differential coupon rate—a small interest bonus—to specific groups like senior citizens, mirroring practices already common with bank Fixed Deposits.
What are the NCS Regulations?→ The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (NCS Regulations) are a key regulatory framework established by the Securities and Exchange Board of India (SEBI) to govern how companies raise money through the issuance and listing of non-convertible securities in the Indian capital market.
Follow the full news here: Consultation paper for permitting debt issuers to offer incentives in public issues to certain category of investors.