Capital market regulator SEBI plans to permit debt issuers to offer higher coupon rate or discount to the issue price to certain categories of allottees such as senior citizens, women, armed forces personnel and retail subscribers to encourage retail participation in debt securities, while providing a fillip to the number of public issuances in the debt market.
The discount to be offered will be at the sole discretion of the issuer and will be disclosed upfront in the offer document. Further, the said differential offering will be limited to the original allottee of the public issue, said SEBI in a consultation paper issued on Monday.
Market participants can express their views on the proposal to offer discount and incentives by November 17.
The move will be similar to that of Offer for Sale (OFS) of shares by promoters through Stock Exchange mechanism where SEBI has permitted the seller to offer discount to retail investors. The details of discount and percentage of reservation for retail investors are required to be disclosed upfront in the notice of OFS to the exchange.
It is a common practice for banks, NBFCs to offer higher interest rates on fixed deposits to senior citizens and women depositors, said SEBI.
The market regulator move comes on the back of feedback from the industry for increasing participation in the debt market. During discussions held with SEBI, few market participants proposed to permit debt issuers to offer incentives in public issues to certain category of investors in order to encourage them to invest in debt securities.
Upon analysis of recent data in respect of public issuance of NCDs, it was observed that the amount of public debt issues were down from ₹19,168 crore in FY’24 to ₹8,149 crore in FY25, which further emphasise the need to increase retail participation in debt market through public issuance mode, said SEBI.