Market regulator Securities and Exchange Board of India (SEBI) on Friday approved a series of significant regulatory reforms, including simplified transmission of securities to legal heirs, the reintroduction of open-market share buybacks through stock exchanges, intraday borrowing facilities for mutual funds and a faster approval mechanism for alternative investment fund (AIF) schemes.
At its 214th board meeting, the market regulator also cleared amendments relating to municipal bonds, securitised debt instruments, Social Stock Exchange (SSE) capacity-building initiatives and governance reforms for SEBI officials.
Faster and Simpler Transmission of Securities
Among the most investor-friendly measures approved by the board are reforms aimed at easing the transfer of securities following the death of an investor.
SEBI introduced a new quick transmission processing (QTP) category for small-value claims. Under this framework, claims of up to ₹10,000 for physical holdings and ₹30,000 for dematerialised holdings can be processed through a simplified mechanism requiring minimal documentation.
The regulator has also doubled the thresholds for simplified documentation. For physical holdings, the limit has been increased from ₹5 lakh to ₹10 lakh per listed company, while for demat holdings, it has been raised from ₹15 lakh to ₹30 lakh per beneficial owner.
In addition, several documentation requirements have been relaxed.
The requirement to submit a permanent account number (PAN) has been removed since PAN details are already available at the time of opening demat accounts. SEBI has also dispensed with the mandatory requirement of probate of a will, aligning the framework with recent changes in succession laws.
Claimants will now be allowed to submit a combined affidavit-cum-no objection certificate (NOC) instead of separate affidavits and NOCs.
To simplify verification, SEBI has permitted the use of QR-code-enabled death certificates alongside original or attested copies. For investors who died overseas, additional verification channels through overseas branches of Indian banks and certain foreign banks have also been introduced.
According to SEBI, these changes will reduce procedural delays, costs and hardships faced by families seeking the transfer of securities.
Open-Market Buybacks Through Stock Exchanges Reintroduced
The board approved amendments to the SEBI (Buy-back of Securities) Regulations, 2018, restoring the stock exchange route for open-market buybacks, effective from 1 August 2026.
The route had previously been discontinued, leaving companies with only the tender offer route and the book-building mechanism for open-market buybacks.
SEBI said changes in the taxation framework and stakeholder feedback warranted the reintroduction of the stock exchange route.
Under the revised framework, companies undertaking buybacks through stock exchanges must complete the process within 66 working days from the commencement of the buyback. At least 40% of the earmarked buyback amount must be utilised during the first half of the buyback period.
The regulator has also mandated the dissemination of buyback information through electronic communication channels in addition to newspaper advertisements.
Promoters and their associates will remain barred from participating in open-market buybacks. To ensure compliance, their holdings will remain frozen at the ISIN level during the buyback period.
In a move aimed at reducing compliance costs and improving ease of doing business, the appointment of a merchant banker has been made optional. Where no merchant banker is appointed, the associated responsibilities will be distributed among the company, the compliance officer, the statutory auditor, the secretarial auditor, and the stock exchanges.
Mutual Funds Allowed Intraday Borrowing
SEBI also approved amendments to the Mutual Fund Regulations to permit mutual funds to undertake intraday borrowing for managing temporary liquidity mismatches.
The facility will help funds address settlement timing differences arising from pay-in and pay-out obligations, foreign exchange settlements and mark-to-market payments on derivative positions.
The regulator clarified that intraday borrowing cannot be used as leverage and must be repaid by the end of the trading day.
Any borrowing beyond the same day will be treated as overnight borrowing and subject to existing regulatory limits.
Asset management companies (AMCs) will be required to maintain appropriate documentation and implement board-approved policies governing the use of the facility.
GARUDA Framework to Accelerate AIF Launches
In another ease-of-doing-business initiative, SEBI approved the Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) mechanism.
The framework is intended to reduce the time required to launch new AIF schemes and facilitate faster deployment of capital.
For regular AIF schemes, launch timelines have been reduced to 10 working days.
Accredited Investor-only schemes and Angel Funds will enjoy greater flexibility and may launch immediately upon registration or filing of placement documents with SEBI, without requiring merchant banker processing.
SEBI expects the framework to improve operational efficiency and reduce delays for fund managers.
Social Stock Exchange Capacity Building Framework
The board approved the transfer of the capacity building fund for the social stock exchange ecosystem from NABARD to the newly incorporated social stock exchange-capacity building foundation (SSE-CBF), a Section 8 company.
SEBI said the transition would streamline capacity-building activities and strengthen institutional support for social enterprises and other stakeholders participating in the SSE ecosystem.
Securitised Debt Market Rules Aligned with RBI Norms
SEBI approved amendments to regulations governing securitised debt instruments to align the framework more closely with Reserve Bank of India (RBI) guidelines.
The revised rules permit single-asset securitisation transactions by RBI-regulated entities such as banks and non-banking finance companies (NBFCs), subject to enhanced disclosures regarding concentration risks.
The board also shifted certain disclosure obligations from originators to servicers, reflecting prevailing market practices.
Additional amendments include governance changes for trustees, clarification of group-related transaction provisions and powers for SEBI to appoint replacement trustees where necessary to ensure continuity of securitisation structures.
According to the regulator, the changes will support the development of India's listed securitisation market while maintaining adequate safeguards for investor protection.
Municipal Bond Market Receives Regulatory Push
To encourage greater participation in the municipal bond market, SEBI approved several amendments to the Issue and Listing of Municipal Debt Securities Regulations.
Municipal bodies will now be allowed to raise funds for refinancing existing project debt, subject to enhanced disclosure requirements.
The regulator has also clarified rules governing pooled finance vehicles that enable multiple municipalities to raise funds jointly.
To broaden retail participation, issuers may offer incentives such as additional interest rates or discounts to categories including senior citizens, women, defence personnel and retail investors.
SEBI has also introduced a lower denomination option of ₹10,000 for certain municipal debt securities, alongside the existing ₹1 lakh denomination.
Reporting timelines have been relaxed, with half-yearly financial results now required within 60 days instead of 45 days and annual results within 90 days instead of 60 days.
SME Fundraising Framework Under Review
The board approved a thematic review of regulations governing fundraising by small and medium enterprises (SMEs).
The review will be conducted by the External Experts Advisory Committee, constituted following the Union Budget 2025-26 announcement on periodic assessments of financial sector regulations.
The committee has selected the SME capital-raising framework in securities markets as its theme for FY26-27.
New Code of Conduct for SEBI Members
SEBI also approved a new code of conduct for its members and amendments to the SEBI Employees' Service Regulations.
The move follows recommendations from a high-level committee established to review conflict-of-interest norms, disclosure requirements, and governance standards applicable to SEBI members and officials.
The revised framework aims to strengthen transparency, accountability and public confidence in the regulator's functioning.
Balancing Investor Protection and Ease of Doing Business
The reforms approved at the board meeting reflect SEBI's twin objectives of strengthening investor protection and reducing regulatory friction across market segments.
From simplifying securities transmission for legal heirs and reviving an important buyback route for listed companies to accelerating AIF launches and boosting municipal financing mechanisms, the measures are expected to have a far-reaching impact on India's financial markets.
Many of the reforms were preceded by public consultations and stakeholder discussions, underscoring SEBI's growing emphasis on evidence-based policymaking and industry feedback in shaping regulatory frameworks.
