𝐒𝐄𝐁𝐈 𝐂𝐨𝐧𝐬𝐮𝐥𝐭𝐚𝐭𝐢𝐨𝐧 𝐏𝐚𝐩𝐞𝐫: 𝐏𝐫𝐨𝐩𝐨𝐬𝐞𝐝 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 𝐭𝐨 𝐒𝐃𝐈 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐢𝐨𝐧𝐬

SEBI (Issue and Listing of Securitized Debt Instruments and Security Receipts) Regulations, 2008 (SDI Regulations) deals with issuance, listing and trading of securitized debt instruments (SDIs) and of security receipts. SDIs in India are also governed by Reserve Bank of India (RBI) under its Master Direction – RBI (Securitization of Standard Assets) Directions, 2021 – for standard assets and the SARFAESI Act. Thus, SEBI proposes to amend these regulations by keeping the RBI’s master directions as the benchmark.

A working group was constituted by SEBI which recommended several changes to the SDI regulations in its report. Significant changes suggested under the consultation paper includes:

(a) Mode of issuance and transfer and minimum ticket size: SDIs to be issued and transferred only in demat form and the minimum ticket size for Non-RBI regulated originators would be INR 1 crore and for RBI regulated, the same would be as per RBI (currently ₹1 cr)

(b) Number of Investors: Private placements limited to 200 investors; beyond that, a public issue is required. However, Qualified Institutional Buyers excluded from the 200-investor count.

(c) Offer Period: Public offer would be open for minimum of 3 days and maximum of 10 days.

(d) Minimum Risk Retention (MRR): MRR would be 10% (or 5% for short maturity receivables upto 24 months)

(e) Changes to Definition of Debt/Receivables: Debt / Receivables would include listed debt securities, trade receivables (arising from bills/invoices duly accepted by the obligors), rental receivables and equipment leasing receivables. No other debt or receivable (including unlisted debt securities) shall be permitted to be an underlying for an SDI.

(f) Amendments on Trustees
(i) Trustee Composition: Only SEBI-registered Debenture Trustees can act as SPDE trustees.
(ii) Trustee Removal: SEBI approval no longer required for trustee removal or replacement; aligned with NCS and MF Regulations.
(iii) Trustee Duties: Amendments to enhance clarity, accountability, and transparency in trustee duties, per NCS and MF Regulations.

(g) Amendments on Disclosure Requirements: Semi-annual updates mandated and continuous updates to stock exchanges by Debenture Trustees or CRAs for rating changes

(h) Legislative Reference Revisions: References to concepts and provisions from Monopolies and Restrictive Trade Practices Act, 1969 & Companies Act, 1956 such as the term “group” or “under the same management” to be deleted since both these legislations have now been repealed. SDI Regulations to re-define these terms as per Competition Act 2002 or SAST Regulations .and/or associate company and/ or subsidiary.

(i) Rights of investors in an SDI shall not be varied without their consent.

A copy of the Consultation paper is attached.

Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.