Securities and Exchange Board of India (Sebi) has decided to allow ‘on tap public issue of bonds,’ a mechanism which would allow corporates to sell bonds directly to investors through the stock exchanges, The Economic Times reported, adding that the sale can be done after filing a single prospectus.

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“After filing the tap bond issue prospectus, a corporate can decide when to enter the market. It can be multiple times during a financial year depending on the fund need and market appetite…as the name suggests, it’s turning the tap on or off. Such issuances could be cheaper, and certainly a far quicker way to raise debt capital,” a person familiar on the development told ET.

Under 'tap', formalities like dealing with the registrar, merchant banker or issuing new advertisements and application forms can be avoided, the report said, adding that the stock exchange would be used to invite investors.

The market regulator is looking for ways to develop the basic framework for ‘on tap public issue’ and may invite feedback soon from market participants, the report said.