SEBI Notifies Amendments To The Regulatory Framework For Municipal Debt Securities

The Securities and Exchange Board of India (“SEBI”), by Circular dated 11.08.2026¹ (“ILMDS Amendment Circular”), has notified amendments to the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (“ILMDS Regulation”) in respect of certain operational aspects for municipal debt securities (“MDS”).

The following amendments to the ILDMS Regulations have been introduced by the ILMDS Amendment Circular:

1. Fixation of face value of MDS: Regulation 22 of the ILMDS Regulation mandates that the face value of MDS shall be disclosed in the offer document or placement memorandum. ILMDS Amendment Circular further clarifies that MDS shall have face value of INR 1 lakh or INR 10,000. MDS to be issued at face value of INR 10,000 shall have a fixed maturity and will be without any structured obligations. The present requirements are only for privately placed MDS and not for public issue.
2. SEBI by circular dated 13.11.2019 had mandated continuous disclosure and compliances by listed entities under the ILMDS Regulations (“ILMDS Circular”) which, inter alia, specified requirements relating to the escrow account payment mechanism and timelines for submission of financial results to amends the following provisions of the ILMDS Circular:
   1. In case the listed entity is a pooled finance vehicle (“PFV”) or special purpose vehicle (“SPV”) set up under the Pooled Finance Development Fund of India, the constituent municipalities are required to create a no-lien escrow account, interest payment account, sinking fund account and general account as provided under the ILMDS Circular. The PFV or SPV shall throughout the tenure of a MDS issued maintain an amount equivalent to one year’s interest in the interest payment account.
   2. The timeline for preparation and submission of half yearly un-audited financial results to stock exchanges has been increased from 45 days to 60 days from the end of first half of the year and submission of annual audited financial results with audit report for the financial year from 60 days to 90 days from the end of the financial year.

The provisions of the ILMDS Amendment Circular have come into effect on the date of its notification, i.e., 11.08.2026.

Footnote

^{1 Amendment to SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015.}

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