Debt issuers may offer sops to select investors: Sebi

New Delhi: Markets regulator Sebi on Monday proposed to allow debt issuers to offer incentives in public issues to certain categories of investors, including senior citizens, women and retail subscribers, to encourage greater retail participation in the bond market and revive interest in public debt issuances.

Currently, Regulation 31 of the Sebi (Issue and Listing of Non-Convertible Securities) Regulations, 2021 prohibits any person connected with an issue from offering incentives, directly or indirectly, in cash, kind, or services, except for legitimate fees or commissions.

Sebi, in its consultation paper, has now proposed an amendment to this regulation to allow issuers to offer a higher coupon rate or a discount to the issue price for certain investor categories. The regulator suggested that issuers be permitted to offer such incentives at their discretion, provided details are disclosed upfront in the offer document. The incentives would apply only to original allottees and would not transfer if the bonds are sold or transmitted later.

"It is proposed to permit issuers to offer incentives in the form of higher coupon rate or discount to the issue price to certain categories of allottees like senior citizens, women, armed forces personnel (viz. serving defence personnel, ex-servicemen and widows of ex-servicemen) and retail subscribers to encourage retail participation in debt securities, while providing a fillip to the number of public issuances in the debt market," Sebi said.

To implement this, Sebi proposed adding a proviso to Regulation 31 explicitly allowing issuers to offer higher coupon rates or issue price discounts to eligible investors. The regulator noted that similar incentives already exist in other financial sectors.