SEBI Proposes to Introduce ‘Sustainable Securitised Debt Instruments’ to Expand Sustainable Finance in Securities Market

Consultation Paper; Dated: 16.08.2024

SEBI has released a Consultation Paper on expanding the scope of the sustainable finance framework in the Indian Securities Market. SEBI proposes introducing sustainable securitised debt instruments, i.e. instruments that have sustainable finance credit facilities as the underlying debt and satisfy such international frameworks that SEBI specifies from time to time. Securitisation is a process in which certain types of assets are pooled to be repackaged into interest-bearing securities.

Further, SEBI proposes introducing the framework for social bonds, sustainable bonds, and sustainability-linked bonds to expand sustainable finance in the Indian securities market. Also, to facilitate transparency and augment the credibility of ESG Debt Securities and Sustainable Securitised Debt Instruments, the issuers of ESG Debt Securities would be required to appoint an independent external reviewer/ certifier.

Similarly for sustainable securitized debt instruments, the originator of Sustainable Securitised Debt Instruments must appoint an independent external reviewer/ certifier. The special purpose distinct entity and its trustees must ensure that an independent external review is conducted or has been conducted by the originator in the form, manner and substance required by the SEBI.

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