SEBI Proposes Zero-Coupon Bonds & NCRPS at Reduced Face Value

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  • Last Updated on 4 August, 2025

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SEBI zero-coupon bonds Non-convertible redeemable preference shares SEBI draft circular 2025 Reduced face value securities

Draft Circular SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2025/XXX; Dated: 01.08.2025

SEBI Proposes Inclusion of Zero Interest/Dividend Instruments

The Securities and Exchange Board of India (SEBI) has released a proposal to broaden the scope of eligible securities that can be issued at a reduced face value. As per the draft circular, debt securities or non-convertible redeemable preference shares (NCRPS) that carry zero interest or zero dividend may soon be allowed to be issued at a face value of Rs 10,000. This move aims to provide issuers with enhanced flexibility in structuring financial instruments.

Facilitating Issuance at Reduced Face Value

Currently, only specific instruments qualify for issuance at a lower face value under SEBI’s regulations. The inclusion of zero-coupon debt instruments and non-convertible preference shares in this category will allow entities to structure fundraising instruments that are both cost-efficient and suitable for various market conditions. This proposal is particularly relevant for issuers looking to optimise capital raising without recurring interest or dividend obligations.

Boost to Innovative Capital-Raising Structures

The initiative is expected to encourage financial innovation and support corporate fundraising, especially for start-ups and infrastructure players that may prefer zero-coupon instruments for long-term financing. By issuing these instruments at a reduced face value, companies can appeal to a broader base of investors while simplifying repayment terms. This could also help deepen the Indian debt market and improve liquidity in certain segments.

Public Comments Invited by August 21, 2025

SEBI has invited public comments on the proposed changes, encouraging stakeholders including issuers, investors, and market intermediaries to provide feedback. The draft circular is open for consultation until August 21, 2025. Post consultation, SEBI may finalise the framework and introduce formal amendments to its regulations to implement the proposal.

Click Here To Read The Full Circular 

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied