SEBI Launches Colour-Coded Credit Risk-O-Meter for Debt Securities

Key facts

• The Securities and Exchange Board of India (SEBI) introduced a credit risk-o-meter for debt securities to help investors assess credit risk through colour-coded visualization before investing.
• The risk-o-meter disclosure applies to all listed and proposed issuances of non-convertible securities, commercial papers, securitized debt instruments, security receipts, and structured debt or market-linked debentures, whether by public issue or private placement.
• The risk-o-meter must be mandatorily included in offer documents, abridged prospectus, private placement memoranda, issuer advertisements, and online bond platform providers' web and mobile platforms.
• SEBI asked exchanges and depositories to implement the measure within 45 days.
• SEBI exempted issuers of debt securities or non-convertible redeemable preference shares on a private placement basis from hiring a merchant banker, provided the issuer is registered or regulated by a financial sector regulator like SEBI, RBI, IRDAI, or PFRDA, or listed on a recognized stock exchange for at least one year with no pending fines or penalties.
• The exemption requires the issuer to have no defaults in the last three financial years and the current financial year on payments like repayment, interest, or dividend.
• The exemption applies only to unsubordinated or senior debt securities rated AA- or above, secured by a first or pari passu charge on identifiable assets; for public issuers, securities can be secured or unsecured.
• If a debt security has multiple ratings, the lowest rating will be considered for exemption eligibility.
• SEBI increased the maximum number of ISINs maturing in a financial year for private placement debt issuance from 14 to 17, with six additional ISINs for capital gains tax debt securities by authorized issuers.
• A maximum of 12 of the 17 ISINs is allowed for plain vanilla secured and unsecured debt securities with an aggregate limit of Rs 15,000 crore; one additional ISIN is permitted for each extra issuance of Rs 3,000 crore.
• A maximum of five ISINs maturing per financial year is allowed for structured debt securities, market-linked debt securities, floating rate bonds, zero coupon bonds, and debt capital instruments (Tier II bonds); issuers with only such instruments have an upper limit of 12 ISINs.
• Government of India serviced or extra budgetary resources bonds and ESG debt securities are excluded from calculating ISIN limits.
• SEBI had proposed the credit risk-o-meter in its consultation paper in August 2026.