Regulatory Framework for Each Type of Debt Security in India
Debt securities in India are regulated by different authorities depending on the nature, issuer, and
maturity of the instrument. The main regulators are SEBI, RBI, and MCA.
1. Government Securities (G-Secs)
Nature
Long-term debt issued by Central and State Governments
Includes dated securities and State Development Loans (SDLs)
Regulator✅ Reserve Bank of India (RBI)
Regulatory Framework-Issued under RBI Act, 1934 and Government Securities Act, 2006
Auctioned through RBI’s Negotiated Dealing System (NDS-OM)
Trading and settlement managed by RBI
No credit risk (sovereign guarantee)
Example
Government of India 10-year bonds,State Government bonds (SDLs)
2. Treasury Bills (T-Bills)
Nature
Short-term government debt instruments
Maturity: 91 days, 182 days, 364 days
Regulator✅ Reserve Bank of India (RBI)
Regulatory Framework-Issued at discount through auctions conducted by RBI
Governed by RBI monetary policy framework
No interest payment; returns through price difference
Example-91-day Treasury Bill issued by GoI
3. Corporate Bonds / Non-Convertible Debentures (NCDs)
Nature-Medium to long-term debt issued by companiesCan be secured or unsecured
Regulator✅ SEBI (Primary Regulator)
✅ MCA (Companies Act provisions)
Regulatory Framework-SEBI (Issue and Listing of Non-Convertible Securities) Regulations,
2021
SEBI LODR Regulations, 2015
Companies Act, 2013 – Section 71
Mandatory:
Credit rating
Debenture trustee
Disclosure of financials
Recent SEBI amendments allow:
Incentives for retail investors (within limits)
Stronger governance for High-Value Debt Listed Entities (HVDLEs)
Example
Bonds issued by NTPC, PFC, REC, Tata Capital
4. Convertible Debentures
Nature-Debentures convertible into equity shares
Regulator-✅ SEBI + MCA
Regulatory Framework-SEBI (ICDR) Regulations, 2018 (equity conversion aspect)
Companies Act, 2013
Disclosure norms applicable for both debt and equity
Example
Partly convertible debentures issued by listed companies
5. Commercial Papers (CPs)
Nature-Short-term unsecured debt
Issued by companies, NBFCs, and financial institutions
Maturity: 7 days to 1 year
Regulator-✅ Reserve Bank of India (RBI)
Regulatory Framework-Governed by RBI Guidelines on Commercial Paper
Issued in dematerialized form
Only credit-worthy issuers allowed
Used for working capital needs
Example
CPs issued by HDFC Ltd., Infosys, Reliance Industries
6. Certificates of Deposit (CDs)
Nature-Short-term debt issued by banks and financial institutions
Regulator
✅ Reserve Bank of India (RBI)
Regulatory Framework-Issued under RBI guidelines
Issued at discount
Traded in secondary market
Example
CDs issued by SBI, ICICI Bank
7. Bonds Issued by Banks and Financial Institutions
Nature-Long-term debt instruments
Includes infrastructure bonds, tier-I and tier-II bonds
Regulator-✅ RBI (issuer regulation)
✅ SEBI (listing and trading)
Regulatory Framework
RBI norms for capital adequacy
SEBI regulations for listing and disclosure
Dual regulation applies
Example
Infrastructure bonds issued by SIDBI, NABARD
8. Municipal Bonds
Nature-Debt issued by urban local bodies
Regulator-✅ SEBI
Regulatory Framework-SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015
Mandatory credit rating
Disclosure of revenue streams
Example
Municipal bonds issued by Indore Municipal Corporation
9. Securitized Debt Instruments
Nature
Asset-backed securities (ABS), mortgage-backed securities (MBS)
Regulator-✅ SEBI
Regulatory Framework
SEBI (Public Offer and Listing of Securitized Debt Instruments) Regulations, 2008
Pooling of receivables
Disclosure and trustee requirements
Example
Loan securitization by NBFCs
Conclusion
The regulatory framework for debt securities in India is instrument-specific and multi-regulatory:
RBI regulates government and money market debt
SEBI regulates corporate, municipal, and listed debt securities
MCA governs corporate compliance under Companies Act
This structured regulation ensures market stability, transparency, and investor protection.