Direct Tax
Consulting
ESG Advisory
Indirect Tax
Growth Advisory
Internal Audit
BFSI Audit
Industry Audit
Valuation
RBI Services
SEBI Services
IRDA Registration
AML Advisory
IBC Services
NBFC Compliance
IRDA Compliance
Finance & Accounts
Payroll Compliance Services
HR Outsourcing
LPO
Fractional CFO
General Legal
Corporate Law
Debt Recovery
Select Your Location
This article will study how the public issue of debt securities is done and its mode of issue.
Table of Contents
SEBI is the Securities and Exchange Board of India established under SEBI Act, 1992[1]. It is a regulatory body that controls the security market in India. The main objective of SEBI is to protect investors’ interest and develop the security market in India. It is a body that regulates the issue of securities and its mode of issue.
The public issue is an issue of securities in the market to attract investors for a subscription. The shares are offered for sale to raise capital from the public. The investor who wants to buy shares must have an application to the company, and then debt securities are allotted. The public issue can be further classified into IPO (Initial Public Offer) and FPO (Follow on Public Offer). Section 23 of the Companies Act, 2013 prescribes the provisions for issuing of securities.
A debt security is a debt instrument to buy or sell in the market before its maturity. The structure represents a debt owed by the issuer and an investor who is a lender.
The investors purchase it to have a return on their capital. The repayment depends on the one who issues to meet their promises; failure to which will lead consequences.
Interest payments associated with such securities also is a regular mode of income throughout the year. These payments are guaranteed and maintain the cash flow.
It can also act to diversify their portfolio. Investors can use these financial instruments to manage the risk of their portfolio.
Examples of debt securities include:
These can also come in collateralized securities, such as collateralized debt obligations (CDO), collateralized mortgage obligations (CMO), zero-coupon securities.
There are several modes through which bidding in the public issue of debt securities is done.
Modes of public issue of securities
UPI (Unified Payment Interface) is a mode of payment through which instant payment is made. It is developed by NPCI (National Payments Corporation of India).
A circular on 23 November 2020 was issued by SEBI that introduced the UPI (Unified Payments Interface) mechanism as an additional mode for making online applications for public issues of various securities. It mandates adding the UPI mechanism as an optional application feature for the public issues of debt securities opens after 1 January 2021.
Salient features:
An investor can also apply through the ASBA (Applications Supported by Blocked Amount) mode or SCBS (Self- Certified Syndicate Banks or Syndicate ASBA.
The circular has increased the responsibilities of the depository participants in the UPI process, inter alia:
The steps are:
Public issue of debt securities through the UPI mechanism is a step towards digitalization. The online and offline process is quite the same. The UPI mechanism brings ease of making an application for public issue of debt securities.
Read our article: All about SEBI (ICDR) (Amendment), Regulations, 2021
With the rising inflation rates and various other economic factors, wealthy Americans are incre...
Before approaching the new suppliers or any other third parties, you should always go for the v...
With the increasing landscape of Fintech Companies, it is increasingly vital that fintech compl...
This blog gives a detailed description through an audit report for industrial waste by examinin...
On 1st March 2024, the IRDAI came up with a notification via F. No. IRDAI/Reg/5/199/2024 for Bi...
Are you human?: 3 + 2 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The Portfolio Managers (PM) are responsible for safeguarding the funds and securities of their clients. They are re...
06 Oct, 2022
The Securities and Exchange Board of India (SEBI), the capital markets regulator, has recommended amending the curr...
30 May, 2023
Chat on Whatsapp
Hey I'm Suman. Let's Talk!