SEBI Amends Municipal Debt Securities Regulations With Escrow and Reporting Changes

SEBI issued a circular dated August 11, 2026, amending the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015, based on recommendations from a Working Group constituted in August 2024. The amendment applies to all issuers of listed municipal debt securities, recognized stock exchanges, depositories, and registered merchant bankers. Key substantive changes include: (1) face value specifications for privately placed municipal debt securities set at Rs. One Lakh or Rs. Ten Thousand with fixed maturity requirements for the latter category; (2) a two-step escrow account mechanism for pooled finance vehicles and SPVs to ensure timely repayment obligations; (3) relaxed financial reporting timelines, extending from the previous standard to 60 days for half-yearly unaudited results and 90 days for annual audited results. These changes modernize disclosure and repayment safeguards for municipal debt issuance and listing, directly affecting municipalities, registered merchant bankers, and listed company compliance frameworks under SEBI ILMDS Regulations.