Daijiworld Media Network - New Delhi

New Delhi, Oct 27: The Securities and Exchange Board of India (SEBI) on Monday proposed a new framework allowing incentives for select categories of retail investors to encourage greater participation in public issues of debt securities.

In its consultation paper, SEBI suggested that issuers may be permitted to offer higher coupon rates or discounted issue prices to specific groups, including senior citizens, women, members of the armed forces, and retail subscribers. The proposal aims to make debt investments more attractive for small investors and broaden participation in the bond market.

The market regulator noted that the volume of public debt issues has seen a sharp decline—from Rs 19,168 crore in FY24 to Rs 8,149 crore in FY25—indicating the need for measures to stimulate the segment.

The regulator has invited public feedback on the proposal by November 17.

Drawing parallels with the Offer for Sale (OFS) mechanism for equities, SEBI said sellers are already allowed to provide discounts to retail investors, provided the terms are disclosed upfront. The regulator said a similar approach can be extended to public debt offerings, ensuring full transparency in offer documents.

SEBI also clarified that any differential offering—whether a higher coupon or a price discount—would be at the discretion of the issuer and applicable only to the original allottees of the issue.

The proposal is part of SEBI’s broader push to deepen India’s bond market and diversify investor participation.

Earlier this month, a CRISIL report projected that 10-year government bond yields are likely to decline in the coming months due to softening inflation, lower oil prices, and expectations of monetary easing by the Reserve Bank of India.