SEBI’s Recent Proposals On Review Of ISIN Norms For Privately Placed Debt Securities

1. Overview

SEBI has floated a consultation paper dated August 10, 2026, proposing two distinct sets of amendments affecting issuers of privately placed, listed non-convertible debt securities ("NCDs"):

• Issue I — Relaxation of the annual cap on the number of ISINs that may mature in a financial year (Chapter VIII of the NCS Master Circular); and
• Issue II — Removal of the requirement for a listed entity to retroactively list all its outstanding unlisted NCDs before it can list a new one (Regulation 62A, SEBI LODR Regulations, 2015).

2. Issue I — ISIN Maturity Limits for Private Placement

The Problem

Since April 1, 2023, an issuer of privately placed debt securities has been capped at 14 ISINs maturing in any financial year — 9 for "plain vanilla" debt and 5 for structured/market-linked debt — with an additional 6 ISINs available separately for Section 54EC capital-gains bonds. A one-time bonus of 3 additional plain-vanilla ISINs unlocks only once outstanding debt across the 9 ISINs reaches Rs. 15,000 crore.

Issuers — NBFCs in particular — have represented that this forces "bunching" of redemptions, since 9 ISINs cannot be spread evenly across 12 months. This creates asset-liability mismatches and heightens refinancing risk. Separately, "Large Corporates" (AA-rated and above, with long-term borrowings of Rs. 1,000 crore or more) are mandated to raise at least 25% of qualified borrowings via debt securities — a target the ISIN cap can make difficult to meet. Market participants have also sought clarity on what qualifies as "structured debt securities" for this purpose.

First, why an ISIN even matters here

An ISIN identifies a fungible pool of securities with identical terms — the same coupon, maturity date, security/seniority, and put-call structure. Depository rules require a fresh ISIN whenever any of these terms differ, even slightly. Conversely, if a new tranche has exactly the same terms as an existing ISIN, the issuer can issue the same under an existing ISIN — no new ISIN needed, and it doesn't consume any cap headroom.

This is the crux of everything below: the cap isn't on how much you borrow, or how many times you go to market — it's on how many distinct maturity-date/terms combinations you're allowed to have outstanding within a single financial year.

What "bunching" actually means

The cap forces an issuer's debt to collapse into a small number of maturity buckets, rather than being spread evenly across the year.

An NBFC generates loan collections roughly evenly across all 12 months. Ideally, it would want its bond repayments laddered the same way — a maturity every month, matched to collections. But with only 9 plain-vanilla ISIN slots available in a financial year, it can have debt maturing on at most 9 distinct dates that year. Three months get nothing maturing; some other months have to absorb what would otherwise have been two separate months' worth of redemptions.

On those concentrated dates, an NBFC needs a much larger lump sum to repay/refinance than its monthly collections alone would cover — so it's exposed to whatever market conditions happen to prevail on those specific dates (rate spikes, NBFC-sector stress, tight liquidity). A smoothly laddered maturity profile diversifies that timing risk away; a bunched one concentrates it.

Why does the cap exist at all, then? SEBI's own stated rationale (para 1.1 of the consultation paper) is the opposite concern: too many small ISINs fragment the primary market and leave each ISIN too thin to trade actively in the secondary market. So the cap is a deliberate trade-off — fewer, larger ISINs for secondary-market liquidity, at the cost of maturity-ladder granularity for the issuer. The 9→12 proposal doesn't abandon that trade-off; it just loosens it slightly (one maturity slot per calendar month instead of nine spread over twelve).

Does it restrict issuing multiple debt instruments, or instruments with different T&C?

An issuer can go to the private placement market as many times a year as it wants, raising as much money as it wants, provided each new tranche either:

• has terms identical to an existing ISIN (in which case it's a "reissuance" — unlimited, doesn't touch the cap), or
• has a maturity date falling in a financial year where ISIN headroom still exists.

If an issuer wants to bring a new tranche with different terms (different coupon reflecting the prevailing yield curve, different tenor, different security package) and that tranche's maturity would fall within an FY where the 9 (proposed 12) ISIN slots are already used up, it cannot create a fresh ISIN for it — full stop. Its only options become:

1. Mirror the coupon/maturity of an existing ISIN exactly (sacrificing pricing flexibility — it can't price the new money at what the market is actually asking for that day), or
2. Push the maturity out to a future FY that still has headroom (distorting the tenor it actually wanted), or
3. Raise via a different instrument altogether (bank loan, CP, ECB) instead of the NCD route.

The Proposal

SEBI proposes four changes, summarised against the current position below:

How This Resolves the Problem

• Raising plain-vanilla ISINs to 12 directly addresses the ALM/bunching concern — issuers can now spread redemptions across all 12 months instead of 9.
• The uncapped, tiered bonus mechanism removes the earlier "cliff" at Rs. 15,000 crore and scales headroom with issue size, which should meaningfully help large/frequent issuers, including those subject to the Large Corporate borrowing mandate.
• Carving out GoI/EBR and ESG bonds frees up capacity for an issuer's own commercial borrowings without displacing policy-driven issuance.
• The FRB/ZCB/Tier-II clarification directly answers the market's request for certainty on what falls within the "structured" bucket — though note this answers only these three instrument types, not a general definition of "structured debt securities".

3. Issue II — Mandatory Listing of Pre-Existing Unlisted NCDs (Regulation 62A, LODR)

The Problem

Regulation 62A, effective January 1, 2024, requires a listed entity that lists any new NCD to also list all of its outstanding unlisted NCDs issued on or after January 1, 2024, within three months of that listing. Only NCDs issued on or before December 31, 2023 were grandfathered — a one-time cut-off tied to when the rule was introduced.

The unintended consequence: an issuer that is unlisted today, and decides to list debt for the first time at any point in the future, must first retroactively list every unlisted NCD it has issued since January 2024, even instruments it never intended to list incurring listing costs, consuming ISIN headroom, and triggering covenant-monitoring obligations on legacy paper. SEBI's own data confirms the rule is working against its stated purpose: listed debt as a proportion of total (listed + unlisted) issuance has fallen from 80.81% (September 2023, when the rule was introduced) to 76.55% (June 2026) i.e., the clean-up obligation appears to be discouraging issuers from listing debt at all, rather than encouraging it.

The Proposal

How This Resolves the Problem

• Removing the mandatory clean-up eliminates the one-off cost and operational burden (ISIN consumption, covenant systems) that was specifically deterring first-time issuers from listing debt — directly targeting the trend SEBI's own data shows.
• The forward-looking listing obligation is retained in full, so the policy objective — that once an issuer chooses the listed market, all its subsequent debt stays transparent to that market — is preserved.

5. Next Steps

Comments on the consultation paper are due by August 31, 2026, via SEBI's online public comments portal.

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The views expressed in this article are solely those of the author in her personal capacity and are based on her understanding of the applicable legal and regulatory framework. They do not necessarily represent the views, policies or practices of organisation with which the authors is associated.