SEBI Introduces Six Tier Colour-Coded Credit Risk Indicator For Debt Securities

The Securities and Exchange Board of India (SEBI) has introduced a 'Credit Risk-o-Meter' to help investors assess the credit risk of debt securities through a colour-coded visual indicator.

Under a circular dated October 7, 2026, the Credit Risk-o-Meter will be mandatory in offer documents, abridged prospectuses, private placement memorandums, advertisements and the web and mobile platforms of Online Bond Platform Providers (OBPPs).

The framework maps existing credit ratings into six risk categories, ranging from “Lowest Credit Risk” for AAA-rated securities to “High to Very High Risk of Default” for ratings ranging from B+ to D.

The six risk categories will be represented through colour codes, ranging from Irish Green for the lowest credit risk (AAA) to Red for high to very high risk of default (B+ to D), with intermediate risks shown in chartreuse, neon yellow, caramel and dark orange.

Where multiple credit ratings are available, the meter will reflect the lowest rating.

The actual credit rating and name of the credit rating agency must also be disclosed. For unsecured debt securities, the word “unsecured” must be displayed in bold red text. The meter will also indicate where an issuer is classified as “Issuer Not Cooperating”.

The circular will come into force 45 days from the date of issuance.