Zerodha co-founder Nithin Kamath has always batted for bonds as the right stepping stone for most Indians investors. Bonds so far have been an HNI product but that changed from today.
To enhance the participation of retail investors in the corporate bond market, Sebi decided to cut the face value of such debt securities to Rs 10,000 from Rs 1 lakh at present.
“Companies can now issue bonds with face value of Rs.10,000. This is a great move that can help attract retail participation in the bonds. With all the changes in the last few years, SEBI has done an amazing job of making bonds accessible to small investors,” Kamath wrote in an X post.
Kamat had in earlier post lamented on the non-availability of bonds with small face values. “Most bonds are issued through private placements and have face values of Rs 10 lakh+. So retail investors were priced out,” he had said.
Sebi has also decided to come out with a framework for unit-based employee benefits (UBEB) in the context of REITs (real estate investment trusts) and InvITs (infrastructure investment trusts).
Apart from lowering the denomination, Sebi has standardised the record date for identifying eligible holders, harmonised the format of the due diligence certificate provided by the debenture trustee and provided flexibility regarding publication of financial results in newspapers for entities that have listed only non-convertible securities.
Sebi said that its board approved the proposal to provide an option to the issuers to issue NCDs or NCRPS through private placement mode at a reduced face value of Rs 10,000 along with the requirement to appoint a merchant banker.
Such non-convertible debentures (NCDs) and non-convertible redeemable preference shares (NCRPS) should be plain vanilla, interest or dividend-bearing instruments. However, credit enhancements would be permitted in such instruments. To address the inconsistencies relating to the fixation of record dates and to bring uniformity and standardisation in terms of market practice followed by various issuers, the Sebi board approved the proposal that record date for the payment of interest repayment of principal of debt securities or NCRPS should be 15 days prior to the due dates of such payment obligations.