Exemptions for appointing merchant bankers for private debt placement
Certain listed companies can now issue debt privately without hiring a merchant banker if they meet specific financial and regulatory criteria.
- Document
- Circulars
- Dated
- 07 Oct 2026
- Effective
- October 07, 2026
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Regulated companies can now issue debt without a merchant banker.
- Issuers must have a clean record with no pending regulatory fines.
- A statutory auditor must certify no defaults for the last three years.
- Debt securities must hold a credit rating of AA- or higher.
In short
This SEBI circular allows eligible listed companies to skip the mandatory appointment of a merchant banker when raising debt through private placement to simplify the process.
What has changed
How it worked before
Previously, all issuers were required to appoint at least one merchant banker for any debt security or non-convertible redeemable preference share issued on a private placement basis.
What has changed
The rule now provides an exemption for specific, high-rated, and regulated issuers to proceed without a merchant banker, provided they meet strict compliance and security standards.
Who this affects
Listed companies that are regulated by SEBI, RBI, IRDAI, or PFRDA and meet specific credit rating and compliance history requirements.
An example
A listed financial company regulated by the RBI wants to raise debt privately. They have a clean compliance record, an AA rating, and no defaults in the last three years. Under this new rule, they can now issue this debt without hiring a merchant banker, provided they submit the required auditor certificate to the stock exchange.
What you should do
If you are an eligible issuer, obtain a certificate from your statutory auditor confirming no defaults and secure in-principle approval from your stock exchange.
If you do nothing
If you do not meet the exemption criteria and fail to appoint a merchant banker, your debt issuance will not comply with SEBI regulations. This may lead to regulatory scrutiny, fines, or the rejection of your listing application by the stock exchange.
The terms explained
- Merchant Banker
- A financial expert who manages the process of issuing securities to the public or private investors.
- Private Placement
- Selling shares or debt directly to a select group of investors rather than the general public.
- Statutory Auditor
- An independent accountant who checks a company's financial records to ensure they are accurate and legal.
- Non-Convertible Securities
- Investments like bonds that pay interest but cannot be turned into company shares.
The original document
| Issued by | SEBI |
|---|---|
| Document | Circulars |
| Full title | Exemption from the requirement of mandatory merchant banker appointment for debt issued through private placement by certain listed issuers |
| Issued on | 07 October 2026 |
| Effective | October 07, 2026 |
About Patron Accounting LLP
Patron Accounting LLP is a CA and CS-led accounting and compliance firm that has been working with businesses across India since 2019. We handle the work that keeps a company correct with every department it answers to: day-to-day bookkeeping and accounting, GST registration and returns, income tax filing and assessments, TDS, payroll and PF/ESI, company and LLP incorporation, ROC and MCA compliance, statutory and internal audit, physical stock and inventory audits, trademark and other registrations, and the certificates and reports that banks, buyers and regulators ask for.
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