The Securities and Exchange Board of India (SEBI) has tweaked regulations to allow zero-coupon bonds to be issued at a reduced face value of ₹10,000, making these instruments more accessible to a wider set of investors.
What Are Zero-Coupon Bonds?
Zero-coupon bonds do not pay periodic interest. Instead, they are issued at a discount to their face value, and investors earn returns through the difference between the issue price and the redemption value, effectively offering compounded returns over the holding period.
Why SEBI Changed the Norms
Market participants had highlighted the growing usefulness of zero-coupon instruments, especially for:
- Long-term investors
- Institutions looking for predictable, lump-sum returns
- Portfolio strategies focused on compounding without reinvestment risk
By lowering the face value threshold to ₹10,000, SEBI aims to:
- Improve market participation
- Enhance liquidity in debt markets
- Make zero-coupon bonds more investor-friendly
Impact on Debt Markets
The move is expected to encourage more issuances of zero-coupon bonds, offering issuers greater flexibility while giving investors a simple product with clear return visibility and no interim cash flow management.
With this regulatory tweak, SEBI continues its push to deepen India’s corporate bond market and broaden the range of fixed-income investment options.
Keywords: Zero-coupon bonds India, SEBI bond norms, zero coupon bond face value, debt market reforms, fixed income investment India, SEBI regulations 2025
