SEBI Consultation Paper 2026 — Higher ISIN Limits for Private Placement Debt & Removal of Mandatory Listing of Past Unlisted NCDs

Background

Chapter VIII of SEBI's NCS Master Circular caps how many ISINs can mature in a single financial year for an issuer's privately placed debt securities. The idea, when this cap was introduced, was straightforward: stop issuers from fragmenting the primary market into dozens of thinly-traded ISINs, and push liquidity into fewer, deeper lines that trade better in the secondary market.

Three years on, SEBI's Working Group on OBPPs, RFQ platform, and related issues — along with feedback routed through the Corporate Bonds and Securitization Advisory Committee (CoBoSAC) — has flagged that the cap is now creating friction of its own. This consultation paper packages two related proposals: loosening the ISIN cap itself, and separately, removing a Regulation 62A requirement that has been discouraging companies from listing their debt at all.

Both proposals come with an annexed draft circular and draft regulatory text, so market participants can react to the exact proposed wording, not just the policy intent.

Extant Position — Current ISIN Limits

Under the current Chapter VIII framework (applicable to ISINs used from April 1, 2023), an issuer of privately placed debt securities can have a maximum of 14 ISINs maturing in a financial year, plus 6 additional ISINs reserved for Section 54EC capital gains tax bonds. The 14 splits into 9 for plain vanilla debt (with 3 more unlocked once total outstanding across those 9 ISINs hits ₹15,000 crore) and 5 for structured/market-linked debt securities. An issuer dealing only in structured or market-linked debt is capped at 9 ISINs overall.

Why SEBI Wants to Revisit This

On the listing side, SEBI's own data shows the share of listed debt issuance (as a percentage of total listed plus unlisted issuance) has slipped from 80.81% as of September 30, 2023 — when Regulation 62A's retrospective listing requirement kicked in — to 76.55% as of June 30, 2026. SEBI reads this as evidence that forcing new listers to also list all their pre-existing unlisted debt is discouraging listing altogether.

Proposal 1 — Higher ISIN Limits

Tiered unlock for large issuers

Where total outstanding across the 12 plain-vanilla ISINs maturing in a financial year reaches ₹15,000 crore, one additional ISIN unlocks for every further ₹3,000 crore of outstanding issuance:

Carve-outs from the ISIN count

The paper poses this as Consultation Question 1: are these four proposals — the 17-ISIN overall cap, the 12/5 split, the ₹3,000-crore tiered unlock, and the GoI/EBR and ESG exclusions — appropriate and adequate?

Proposal 2 — Removing Mandatory Listing of Pre-Existing Unlisted NCDs

Regulation 62A of the LODR Regulations currently requires that when a listed entity proposes to list a non-convertible debt security on or after January 1, 2024, it must also list every outstanding unlisted NCD it had previously issued on or after that date — within three months of the new listing. Entities with unlisted issuances outstanding as of December 31, 2023 were grandfathered; anyone listing debt for the first time after that cut-off gets no such grace.

SEBI proposes to drop this retrospective clean-up requirement entirely. Under the proposal, an issuer would only need to list debt securities issued after its first debt listing date — everything issued before that date would be permanently exempt, regardless of when the issuer eventually decides to list.

Importantly, the requirement to list all subsequent debt issuances after an issuer's first listing continues unchanged — this proposal only removes the backward-looking clean-up obligation, not the forward-looking listing discipline.

This is posed as Consultation Question 2: is the Regulation 62A amendment proposal at para 4.2 appropriate and adequate?

Annexure A — Draft Circular Highlights

The annexed draft circular (Ref: SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2025/XXX) would replace paragraphs 1.1 to 1.3 of Chapter VIII of the NCS Master Circular with the revised 17-ISIN framework described above, and separately confirms the GoI/EBR and ESG exclusions from the cap computation. If issued as drafted, it would apply with immediate effect and directs stock exchanges and depositories to amend their bye-laws, implement system changes, publish the circular, and monitor issuer compliance.

What Issuers and Intermediaries Should Do Now

CorpLawUpdates Analysis

The ISIN cap relief is a genuine structural fix, not just a number bump. The rationale SEBI itself gives — that 9 ISINs distributed across 12 calendar months creates an inherent gap — is a fair critique of the original design, and moving to 12 lets issuers actually match monthly redemptions to monthly asset cash flows. Clubbing FRBs, ZCBs, and Tier II bonds with structured/market-linked debt under the 5-ISIN sub-limit is a sensible tidy-up rather than a substantive giveaway.

The GoI/EBR exclusion is the one worth watching closely for PSU issuers — it effectively decouples sovereign-linked borrowing programmes from an issuer's own commercial ISIN budget, which is a meaningful capacity unlock for entities that issue heavily on Government's behalf.

The Regulation 62A rollback is arguably the more consequential proposal for market development, even though it's framed as secondary. SEBI's own listed-debt-share data (80.81% → 76.55%) is a rare instance of a regulator publishing evidence that one of its own rules may be backfiring, which strengthens the case for this reversal. The dual-track grandfathering structure is pragmatic — it avoids retroactively changing obligations for entities that already listed under the old regime.

Compliance teams should treat both proposals as directionally settled — the underlying data and stakeholder pressure behind them is strong — but should still use the comment window to flag drafting-level issues, particularly around how "structured debt securities" gets defined for cap purposes, since the paper itself flags this as an open question market participants have raised.