The Securities and Exchange Board of India (SEBI) has approved a set of important regulatory changes aimed at making capital markets more efficient, reducing compliance burdens and improving investor convenience. The decisions were taken during the regulator’s board meeting held on Friday and cover key areas such as share buybacks, mutual funds, alternative investment funds (AIFs), municipal bonds and transmission of securities.
Open Market Buybacks to Resume from August 2026SEBI has decided to bring back the open market share buyback route through stock exchanges from August 1, 2026. Companies will now have the flexibility to choose between the tender offer method and buying back shares directly through stock exchanges.
Created with AI. Errors are possibleTo ensure transparency and protect investors, SEBI has introduced several conditions. Companies must utilise at least 40 per cent of the total buyback amount during the first half of the buyback period, while the entire exercise must be completed within 66 working days.
Promoters and promoter-group entities will not be permitted to participate in these buybacks, and their shareholding will remain locked during the process. The regulator has also made it optional for companies to appoint a merchant banker, which is expected to lower compliance expenses.
Mutual Funds Allowed to Borrow Within the Trading Day
SEBI has amended mutual fund regulations to permit intraday borrowing for handling temporary liquidity mismatches.
Fund houses can use this facility to manage settlement-related timing gaps, foreign exchange settlement requirements, mark-to-market obligations arising from derivative positions and other operational needs.
The regulator clarified that such borrowing cannot be used to create leverage. Any amount borrowed must be repaid before the end of the trading session. If the borrowing extends beyond the trading day, it will be governed by the existing borrowing norms applicable to mutual funds.
GARUDA Framework to Accelerate AIF Launches
To streamline the launch process for Alternative Investment Funds, SEBI has introduced the GARUDA framework, short for Green-Channel: AIF Rollout Upon Document Acknowledgement.
Under this mechanism, standard AIF schemes can be launched within 10 working days. Meanwhile, AI-focused schemes and Angel Funds catering exclusively to accredited investors will be allowed to launch immediately after registration or filing the placement memorandum with SEBI, eliminating the need for merchant banker review.
The regulator believes the new framework will help investment managers deploy capital faster while improving the ease of doing business in the sector.
Municipal Bond Rules Relaxed to Encourage FundraisingSEBI has also approved a series of measures aimed at strengthening India’s municipal bond market.
Municipal bodies will now be allowed to raise money through bonds to refinance existing project-related debt. A framework has also been introduced to facilitate pooled fundraising by multiple municipalities.
To attract more retail participation, issuers can offer benefits such as additional interest rates or discounted issue prices to certain investor categories, including retail investors, women and senior citizens.
In another investor-friendly change, the minimum face value of privately placed municipal bonds has been reduced to as low as Rs 10,000, subject to specified conditions.
Simpler Process for Transmission of Securities
The market regulator has introduced several changes to make the transfer of securities to legal heirs easier and faster after the death of an investor.
SEBI has removed the mandatory requirement of probate of wills in cases where applicable succession laws do not require it. A combined affidavit-cum-No Objection Certificate (NOC) will also be accepted, reducing paperwork for claimants.
Death certificates carrying QR codes can now be used for verification. For certificates issued outside India, additional verification options have been introduced to simplify the process.
According to SEBI, these measures are expected to reduce delays, lower costs and make the transmission process more convenient for beneficiaries.
Apart from these key decisions, the board also approved changes related to securitised debt instruments, the transfer of the Social Stock Exchange Capacity Building Fund to a Section 8 company, revisions to SEBI’s internal code of conduct and the selection of SME capital raising as the theme for an independent regulatory review during FY27.
