NCD Issuance in India: What Issuers Should Consider

By Gradivus Corp · 16 October 2026 · Insights

Before issuing non-convertible debentures (NCDs) in India, an issuer should settle five things: why it is borrowing and how its cash flows will repay the money; whether the issue will be listed or unlisted, and placed privately or offered to the public; how the instrument is designed (tenor, coupon, security, covenants, call and put options); which intermediaries and approvals the chosen route needs; and whether it can run post-issue compliance for the life of the debenture. Listed issues are governed mainly by the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 and the related SEBI master circular. Every issue is also subject to the Companies Act, 2013.

Settle these before mandating intermediaries. It saves time, avoids drafting the same documents twice and lowers the risk of agreeing to a covenant the business cannot live with.

Step 1: Start with purpose and repayment capacity

An NCD is a contractual promise to pay on fixed dates. Before thinking about investors, work through three points.

The first is the use of proceeds. For listed issues, the objects stated in the offer document still matter after the money is in. Under SEBI's listing obligations, issuers report how the proceeds were used, and whether there was any material deviation, alongside quarterly results (Regulation 52(7) and 52(7A) of the SEBI LODR Regulations; format in the July 2025 master circular). Draft the objects with that report in mind.

The second is the cash-flow match. A bullet repayment, amortising principal and step-up coupons each put a different kind of stress on the business. Test the structure against a downside case as well as the base case.

The third is consent from existing lenders. Many term-loan agreements restrict new borrowing, new security or changes in shareholding. Work out early which consents are needed and from whom.

Step 2: Choose the route (listed or unlisted, private or public)

Step 3: Design the instrument

Each of these choices moves pricing and investor appetite.

1. Tenor and repayment profile. Align them with the asset or cash flow being financed.
2. Coupon. Fixed, floating or step-up, and how often it is paid. Decide too whether there will be rating-linked step-ups.
3. Security. Secured NCDs need a clear charge, a security cover ratio and a valuation basis. Unsecured NCDs usually price higher and may run into rating-eligibility limits on some platforms.
4. Options. Under the NCS Regulations, call and put options cannot be exercised within one year of issue, and notice must be given to holders and the debenture trustee (NCS Regulations).
5. Covenants. Financial covenants (such as leverage or interest cover), information covenants and restrictive covenants. Agree the definitions precisely. A loosely defined "EBITDA" or "net worth" is a frequent source of disputes later on.

Step 4: Line up intermediaries and approvals

A typical listed private placement involves:

• Board and shareholder approvals under the Companies Act, including any special resolution required for the private placement and for borrowing limits.
• A debenture trustee, where required, appointed before the offer. The trustee's duties, including due diligence and security monitoring, are set out in the SEBI (Debenture Trustees) Regulations, 1993 and the Master Circular for Debenture Trustees (28 September 2026).
• A credit rating, for listed issues.
• A registrar and transfer agent, and the depositories, for ISIN creation and demat credit.
• An arranger or merchant banker, where the route or the face value requires one.
• Legal counsel for the placement memorandum, the debenture trust deed and the security documents.

SEBI's master circular dated 15 October 2025 consolidates the detailed process requirements for listed issues: offer document content, EBP, listing timelines and post-issue filings. SEBI amends these provisions frequently, so check the current version at the start of every mandate.

Step 5: Plan for the life of the debenture

Raising the money is the shortest phase. For the next three to seven years the issuer has to:

• Pay interest and principal on the exact dates in the documents, after record dates have been fixed and communicated.
• File periodic disclosures under Chapter V of the SEBI LODR Regulations, including utilisation and deviation statements.
• Maintain the agreed security cover and give the debenture trustee the information it needs for its quarterly security cover certification.
• Test covenants on each testing date and report breaches promptly.
• Handle investor queries and grievances.

Issuers that set up a compliance calendar and a covenant register at the time of issue, rather than after the first missed deadline, have a markedly easier time.

Risks and dependencies to watch

The rating outcome drives the coupon and, for some investors, eligibility, so have the business plan and the downside case ready before the rating meeting. Security perfection needs the same early attention. Delays in creating or registering a charge (including filings with the Registrar of Companies) can hold up listing or put the issuer in breach.

A missed negative-pledge consent from an existing lender is a common late-stage blocker. Market windows matter too. Spreads move, and a structure priced for one month may need another look the next.

Finally, operational capacity. Payment dates, record-date management and disclosures each need a clear owner in the finance and secretarial teams.

Frequently asked questions

Is a credit rating mandatory for NCDs in India? For NCDs proposed to be listed, yes: SEBI's framework requires a credit rating. Unlisted NCDs are not subject to the same SEBI requirement, although many investors ask for a rating anyway.

What is the EBP threshold for private placement of NCDs? Since SEBI's 2025 change, private placements of debt securities with an issue size of ₹20 crore or more (including any green shoe) must use an Electronic Book Provider platform. Smaller issues may opt in.

Do all NCD issues need a debenture trustee? It depends on the route, the tenor and whether the issue is secured or listed. The requirements come from the Companies Act, 2013, the related rules and the SEBI regulations. Confirm the position for your issue with counsel at the outset.

Can an issuer call back NCDs early? Yes, if the terms provide a call option. For listed NCDs, SEBI's NCS Regulations do not allow call or put options to be exercised within one year of the date of issue, and prior notice has to be given.

What ongoing reports do listed NCD issuers file? Financial results with debt-specific disclosures, statements on utilisation of proceeds and any deviation (Regulation 52(7) and 52(7A)), and the other event-based and periodic disclosures under Chapter V of the SEBI LODR Regulations.

How long does a listed private placement take? It varies with how ready the issuer is, the rating timeline, security creation and investor discussions. Issuers who already have audited financials, board approvals and security information in hand usually move fastest.

How Gradivus can help

Gradivus Corporate Services supports issuers across the whole NCD lifecycle. Before the issue, we help with instrument design, documentation and regulatory alignment. During it, we handle investor onboarding, allocation and fund-flow management. Afterwards, we cover compliance, reporting and covenant monitoring, with experienced people and purpose-built technology. Learn more about our Capital Issuance & Execution and Capital Structuring services, or contact us for a consultation to discuss your proposed issue. Services are provided as per agreed scope, and agency roles apply only where Gradivus is specifically appointed.

This article is general information, not legal, tax or investment advice.