SEBI Amends Municipal Debt Securities Regulations with ESG & SPV Framework

The Securities and Exchange Board of India (SEBI) has issued the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) (Amendment) Regulations, 2026, notified on 1st July 2026, to amend the 2015 Regulations. The amendments introduce definitions of “retail individual investor” and “working day”; provide for issuance and listing of Environment, Social and Governance (ESG) debt securities in accordance with the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021; enable pooled financing through Special Purpose Vehicles under the Pooled Finance Development Fund Scheme; permit issue advertisements through electronic modes subject to publication of a newspaper notice containing a QR code and link to the complete advertisement; allow incentives such as additional interest or issue price discounts for specified investor categories including senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel, retail individual investors and other categories specified by SEBI; require additional disclosures for project refinancing; and insert Schedule IB prescribing disclosure requirements for Special Purpose Vehicles raising municipal debt securities. The regulations come into force on the date of their publication in the Official Gazette.

SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 1st July, 2026

Securities And Exchange Board of India (Issue And Listing of Municipal Debt Securities) (Amendment) Regulations, 2026

No. SEBI/LAD-NRO/GN/2026/305.—In exercise of the powers conferred under sub-section (1) of section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015, namely: –

1. These regulations may be called the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) (Amendment) Regulations, 2026.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015, ─

I. in regulation 2, in sub-regulation (1),

a. after clause (v) and before clause (w), the following clause shall be inserted, namely, –

“(va) “retail individual investor” means an individual investor who applies or bids for municipal debt securities for a value of not more than two lakhs rupees;”

b. after clause (za), the following clause shall be inserted, namely, –

“(zb) “working day” means all days on which commercial banks in the city, as specified in the offer document, are open for business;

Explanation: For the purpose of this definition, in respect of –

i. Announcement of bid /issue period:

working day shall mean all days, excluding Saturdays, Sundays and public holidays, on which commercial banks in the city as notified in the offer document are open for business;

ii. the time period between the bid/ issue closing date and the listing of the non-convertible securities on the stock exchanges:

working day shall mean all trading days of the stock exchanges for non-convertible securities, excluding Saturdays, Sundays and bank holidays, as specified by the Board;”

II. after regulation 4E, the following regulation shall be inserted, namely-

“4F. Issuance of Environment, Social and Governance Debt Securities

An issuer desirous of issuing and listing of Environment, Social and Governance Debt Securities shall comply with the conditions as may be specified for such securities under Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 and circulars issued thereunder.”

III. after regulation 5 and before regulation 6, the following regulation shall be inserted, namely, –

“5A. Pooled financing through Special Purpose Vehicle

In case the issuer is a special purpose vehicle set up under the Pooled Finance Development Fund Scheme of the Government of India, the constituent Municipalities shall enter into an agreement with such issuer prior to raising funds and shall disclose the same in the offer document. Such special purpose vehicle shall be formed as either a Trust or a Company.”

IV. in regulation 6, in sub-regulation (2), in clause (a), after the words “Schedule I” and before the words “and Schedule IA”, the words and symbols “or Schedule IB, as applicable,” shall be inserted.

V. in regulation 9,

a. in sub-regulation (1),

i. after the words “issuer may make an advertisement” and before the words “in a national daily” the words and symbol “through electronic modes such as online newspapers or website of the issuer or the stock exchange, or” shall be inserted;

ii. the symbol “.” shall be substituted with the symbol “:”;

iii. the following proviso shall be inserted, namely, –

“Provided that issuers opting to advertise the public issue through electronic modes shall also publish a notice in a national daily with wide circulation, exhibiting a QR Code and link to the complete advertisement.”

VI. in regulation 14A, in sub-regulation (2), in clause (a), after the words “Schedule I” and before the words “and Schedule IA”, the words and symbols “or Schedule IB, as applicable,” shall be inserted.

VII. in regulation 22B,

a. the symbol “.” shall be substituted with the symbol “:”;

b. the following provisos shall be inserted, namely, –

“Provided that nothing contained in this regulation shall preclude the issuer from offering an incentive in the form of additional interest or a discount to the issue price to senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel, retail individual investors or any other category of investors as may be specified by the Board from time to time:

Provided further that such incentive shall be available only to the initial allottee but not in case the municipal debt securities are transferred/ transmitted post allotment.”

VIII. in regulation 23, in sub-regulation (2), the word “of” appearing after the words “shall comprise” and before the words “independent directors”, shall be omitted.

IX. in regulation 27, in sub-regulation (3), after the words “Schedule I”, the words and symbols “or Schedule IB, as applicable,” shall be inserted.

X. in Schedule I, in paragraph 5, after clause (h), the following clause shall be inserted, namely,-

“(i) If the project is re-financed, the following details shall be provided in respect of the lenders and existing project(s) related loan(s) or debt that are being refinanced, as per the specified format:

i. Type of existing loan/ debt

ii. Original amount of loan / debt

iii. Existing lenders

iv. Existing rate of interest

v. Existing repayment schedule

vi. Details of project(s) financed by existing loan/ debt

vii. Past restructuring, if any, on the said project

viii. Reason for re-finance”

XI. after Schedule IA and before Schedule II, the following Schedule shall be inserted, namely, –

“Schedule IB

[See Regulation 6, 14A and 27]

(Applicable in case of Special Purpose Vehicle, which is set up for the purpose of raising funds for a person for performing one or more functions entrusted under Article 243W of the Constitution of India)

DISCLOSURES IN THE OFFER DOCUMENT AND PLACEMENT MEMORANDUM

All disclosures specified under this schedule shall be made in the draft offer document or the preliminary placement memorandum or offer document or placement memorandum, as applicable.

1. Instructions:

a. All information shall be relevant and updated. The source and basis of all statements and claims shall be disclosed.

b. All blank spaces in the draft offer document/ preliminary placement memorandum shall be filled up with appropriate data before registering the offer document /placement memorandum, as applicable, with the Registrar of Companies or filing the same with the recognised stock exchanges.

c. Plain English shall be used to enable easy understanding of the contents. Technical terms, if any, used in explaining the business of the issuer shall be clarified in simple terms.

d. Wherever it is mentioned that details are given elsewhere in the document, the same shall be adequately cross-referenced by indicating the paragraph heading and page number.

e. There shall be no forward-looking statements that cannot be substantiated.

f. Consistency shall be ensured in the style of disclosures. If the first person is used, the same may be used throughout. All sentences that contain a combination of first and third persons may be avoided.

g. For presentation currency, only one standard financial unit shall be used.

2. Applicability:

An issuer making a public issue or private placement of municipal debt securities that are intended to be listed shall make the disclosures as specified in this Schedule.

3. General information:

a. Name and address of the head office and other offices of the issuer

b. Registered and corporate office of the issuer, if applicable

c. Details of the members of the Committee approving the Issue/ project(s) of the Issuer and Bond Issue Committee or any such similar committee, in the following format:-

d. Name, designation, address and DIN of each member of the board of directors of the issuer if the issuer is a company.

e. Name, address, telephone number and email address of the compliance officer of the issuer

f. Complete Details of the Official In-charge of dealing with investor Grievances related to the Municipal debt securities, his/her address, phone number, email ID, etc.

g. Chief Accounts and Finance Officer or equivalent of the Issuer

h. Arrangers, if any, of the instrument

i. Debenture trustee of the issue

j. Registrar to an issue

k. Credit Rating Agency (-ies) of the issue and

l. Auditors of the Issuer

m. Names, addresses, telephone numbers, contact person, website addresses and e-mail addresses of the lead manager(s), registrars to the issue, bankers to the issue, brokers to the issue and syndicate member(s); along with URL of SEBI website listing out the details of self-certified syndicate banks, registrar to the issue and depository participants, etc., if applicable.

n. Names, addresses, telephone numbers and e-mail addresses of the Company Secretary, legal advisor, underwriters and bankers to the issue.

o. Names of the debenture trustee(s) shall be mentioned with a statement to the effect that the debenture trustee(s) has given his consent to the Issuer for his appointment. This also needs to be mentioned in all subsequent communications sent to the holders of debt securities.

p. Investor grievances redressal mechanisms.

4. About the issuer and Capital structure of the issuer:

a. The constitution document of the issuer.

b. Details of the capital structure of the issuer, if applicable.

c. Details of the management structure of the issuer.

d. Shareholding pattern of the issuer along with top 10 shareholders of the issuer, if applicable.

e. Resolution authorizing the borrowing of the Issuer and each constituent Municipality along with the list of authorized signatories of the Issuer.

f. Details of necessary Resolution(s) for the allotment of municipal debt securities of the issuer.

g. Memorandum and Articles of Association in case the issuer is a body corporate incorporated under Companies Act, 2013, if applicable.

h. Details of any Reorganization or Reconstruction of management in the last 1 year of the issuer.

i. Capital structure relating to projects for which funds are proposed to be mobilized.

j. Capital grant for the proposed project(s) and the amount received in this regard.

5. Objects of the issue:

a. The proceeds of the proposed issue shall be clearly earmarked for a defined project or a set of projects along with the location of the project(s) and plant and machinery, technology, process, etc.

b. Where the issuer proposes to undertake more than one activity or project, such as diversification, modernization, or expansion, etc., the total project cost activity-wise or project wise, as the case may be.

c. Where the issuer is implementing the project(s) in a phased manner, the cost of each phase, including the phase, if any, which has already been implemented, shall be separately given.

d. An investment plan for the project components as well as phases thereof as well as financing thereof as approved by the local authority or the agency as the case may be.

e. Schedule of implementation of the project(s).

f. Benchmarks for commencement and completion of the project(s) including milestone dates for all components of the project.

g. Details and status of the regulatory approval (if required).

h. Expenses of the Issue:

Expenses of the issue along with a break up for each item of expense, including details of the fees payable to/for separately as under (in terms of amount, as a percentage of total issue expenses and as a percentage of total issue size):

i. Lead manager(s) fees including underwriting commission

ii. Brokerage, selling commission and upload fees

iii. Registrars to the issue

iv. Legal Advisors

v. Advertising and marketing expenses

vi. Regulators including stock exchanges

vii. Printing and distribution of issue stationary

viii. Others, if any (to be specified).

(i) If the project is re-financed, the following details shall be provided in respect of the lenders and existing loan(s) that are being refinanced, as per the specified format:

(a) Type of existing loan

(b) Original Amount of loan / debt

(c) Existing lenders

(d) Existing rate of interest

(e) Existing repayment schedule

(f) Purpose of existing debt

(g) Past restructuring, if any, on the said project

(h) Reason for re-finance.

6. Tax Benefits:

Any special tax benefits (under direct and indirect tax laws) for the issuer and its investors.

7. Issue specific Information:

a. Issue/instrument specific regulations – relevant details (Relevant Act, RBI guidelines, etc.).

b. The detailed rating rationale (s) adopted (not older than one year on the date of opening of the issue)/ credit rating letter issued (not older than one month on the date of opening of the issue) by the rating agencies shall be disclosed. Names of all the credit rating agencies from which credit rating including unaccepted rating has been obtained.

c. Credit Enhancement Mechanisms if any, with complete details, if any.

d. Names of all the recognised stock exchanges where the debt securities are proposed to be listed clearly indicating the designated stock exchange.

e. Additional interest to be paid, above the Coupon Rate, in case of default in payment of Interest and/or principal redemption on the due dates.

f. Penal interest payable by the issuer in case of delay in listing of debt securities from the deemed date of allotment.

g. Debenture Redemption Reserve and such other reserve creation – relevant regulations as applicable.

h. Application process.

i. Procedure for deciding and adjusting payment dates (in response to days when payment cannot be made due to any reason such as sudden bank holiday.

j. ‘Terms of payments’ and procedure and time schedule for allotment and issue certificates/demat credit.

k. How to apply, availability of application forms and letter of offer and mode of payment.

l. Change in terms and conditions of municipal debt securities issued in past 5 years (i.e. change in coupon, maturity, call/put option etc.).

m. Procedure and time schedule for allotment and issue of municipal debt securities.

n. Details of escrow payment mechanism for the repayment of the interest/principal.

8. Financial Information

1. Following details as per the financial statements for past 3 years in tabular format:

a. Abridged Balance Sheet, Income and Expenditure and Receipts and Payments Accounts of the Issuer for the last three financial years with major heads:

Provided issuers who are desirous of issuing debt securities on private placement basis and who are in existence for less than three years may disclose financial

statements mentioned above for such period of existence.

b. Link and Quick Response (QR) code to the web page of the Issuer where the Abridged Balance Sheet, Income and Expenditure and Receipts and Payments Accounts of the constituent Municipalities and Issuer can be accessed should be given.

c. Link and Quick Response (QR) code to the web page of the Issuer where budget documents for the previous three years containing actual financial performance and/or revised estimates along with the details of related party transactions of the constituent Municipalities can be accessed should be given.

d. Financial Parameters of the constituent Municipalities and the Issuer for the last (three) years, separately:

II. Details of top five revenue sources for the previous three years of the constituent Municipalities:

III. Details of property tax collection of the constituent Municipalities:

IV. Borrowings of the Issuer and constituent Municipalities

Details of borrowings, as on the latest quarter end:-

a. Details of Secured Loan Facilities:-

b. Details of Unsecured Loan Facilities:-

c. Details of NCDs/Bonds: –

d. List of the Top ten Debenture Holders (as on….. )

Note: Top ten holders’ (in value terms, on cumulative basis for all outstanding debentures issues) details should be provided.

e. Details of Commercial Paper:- The total Face Value of Commercial Papers Outstanding as on the latest quarter end to be provided and its breakup in following table:-

f. Details of Rest of Borrowings.

g. Details of any outstanding borrowings and debt securities issued for consideration other than cash, whether in whole or part, at a premium or discount, or in pursuance of an option;

V. Sufficient revenue generation and resources for timely servicing and redemption.

VI. Estimated Scenarios of Asset Liability Mis-matches, efforts intended to resolve the same.

9. Legal and Other Information:

a. Pending litigations and material developments:

Pending Litigations involving the issuer/ its directors/ promoters/ subsidiaries/ constituent Municipalities:

vi. All criminal proceedings;

vii. All actions by regulatory and statutory authorities;

viii. Disciplinary action including penalty imposed by SEBI or stock exchanges against the promoters during the previous five financial years including outstanding action;

ix. Claims related to direct and indirect taxes, in a consolidated manner, giving the number of cases and total amount;

x. Other pending litigation – As per the policy of materiality defined by the Board of Directors of the Issuer and disclosed in the offer document/placement memorandum.

b. Outstanding dues to creditors of the issuer:

iv. Based on the policy on materiality defined by the Board of Directors of the Issuer, details of creditors which include the consolidated number of creditors and the aggregate amount involved of the Issuer and constituent Municipalities shall be disclosed, on the website of the Issuer with a web link and Quick Response (QR) code thereto;

v. Consolidated information on outstanding dues to micro, small and medium enterprises, separately giving details of number of cases and amount involved shall be disclosed, on the website of the Issuer with a web link and Quick Response (QR) code thereto;

vi. Complete details about outstanding dues to material creditors along with the name and amount involved for each such material creditor shall be disclosed, on the website of the company with a web link and Quick Response (QR) code thereto.

c. If any of the above mentioned litigation, material developments or dues to creditors etc., arise after the filing the draft offer document/ preliminary placement memorandum, the facts shall be appropriately incorporated in the offer document/placement memorandum. In case there are no such cases, a distinct negative statement is required to be made in this regard in the offer document/ placement memorandum.

d. Material developments since the date of the last balance sheet of the issuer shall be incorporated separately in the offer document or placement memorandum.

e. Statement containing particulars of dates of, and parties to all material contracts and agreements of the issuer:

Provided that a recognized stock exchange may call for such further particulars or documents as it deems appropriate.

f. Any material event/ development or change having implications on the financials/credit quality of the issuer (e.g. any material regulatory proceedings against the Issuer, resulting in material liabilities, restructuring event, etc.) at the time of the issue which may affect the issue or the investor’s decision to invest/ continue to invest in the municipal debt securities.

g. Details of non-payment of statutory dues of the Issuer and constituent Municipalities, if any.

h. Details of all default/s and/or delay in payments of interest and principal of any kind of term loans, debt securities and other financial instrument issued by the Issuer, in the past 3 years.

10. Government approvals:

a. Investment approvals, letter of intent or industrial license from GoI, RBI, etc., as applicable for the issuer, and declaration of the Central Government, Reserve Bank of India or any regulatory authority about the non-responsibility for financial soundness or correctness of the statements;

b. All Government and other approvals which are material and necessary for carrying on the business and operations of the issuer and material subsidiaries.

11. Undertaking by the issuer:

The following undertaking by the issuer shall be given:

a. that it shall submit the documents disclosed in the offer document or placement memorandum to the Debenture Trustee in electronic form (soft copy).

b. that the complaints received in respect of the issue shall be attended to by the issuer expeditiously and satisfactorily.

c. that all steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within the period specified by the Board.

d. Declaration signed by the Director(s) of the Issuer, if it is a body corporate to which the Companies Act, 2013 applies, stating that offer document/placement memorandum contains true, fair and adequate information to enable investors to make a well informed decision making regarding their investment in the proposed issue.

e. a statement to be given by the Board of the Issuer or Standing Committee thereof that all monies received out of the issue shall be transferred to a separate bank account.

f. the details of all utilized and unutilised monies out of the monies collected in the previous issue made by way of public offer shall be disclosed and continued to be disclosed in the balance sheet till the time any part of the proceeds of such previous issue remains unutilized indicating the purpose for which such monies have been utilized and the securities or other forms of financial assets in which such unutilized monies have been invested.

12. Documents to be submitted

a. Copy of the resolution authorizing the borrowing and list of authorized signatories of the issuer.

b. Copy of the Trust deed, where the issuer is constituted as a trust.

c. Documents that have been executed or shall be executed in relation to the issue.

13. Risk factors:

a. Risk factors shall be printed in a clear readable font (of minimum point ten size).

b. Risk factors shall be classified as those which are specific to the project and internal to the issuer and constituent Municipalities and those which are external and beyond the control of the issuer and constituent Municipalities.

(c) Risk factors shall be determined on the basis of their materiality. In doing so, the following shall be considered:

i. Some risks may not be material individually but may be material when considered collectively.

ii. Some risks may have an impact which is qualitative though not quantitative.

iii. Some risks may not be material at present but may have a material impact in the future.

(d) Each risk factor shall appear in the following manner:

i. The risk as envisaged by the issuer and constituent Municipalities.

ii. Proposals, if any, to address the risk.

(e) Comprehensive Disclosure regarding the Risk Factors, including project risks, operational risks, credit risks, liquidity risks, etc.

(f) Management perception of risk factors specific to the project.”

AMIT PRADHAN, Executive Director
[ADVT.-III/4/Exty./192/2026-27]

Notes:

The Securities and Exchange Board of India (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015 were published in the Gazette of India on July 15, 2015 vide notification No. SEBI/LAD-NRO/GN/2015-16/006 and was last amended on August 18, 2023 by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023 vide notification no. SEBI/LAD-NRO/GN/2023/146.