Sebi revives open mkt buyback route

Allows intra-day MF borrowings to manage liquidity mismatches

- ANJANA THERESE ANTONY

THE SECURITIES AND Exchange Board of India (Sebi) board on Friday approved a slew of measures, including the reintroduction of the open market buyback mechanism, allowing intra-day borrowings by mutual funds (MFs) during liquidity mismatches, easing municipal bond norms, and simplifying the process of securities transmission to heirs.

The open market buyback framework will come into effect from August 1, 2026, providing companies with an additional route to buy back shares. Currently, companies undertake buybacks through the tender offer route and open market purchases through the book-building mechanism.

The board approval follows Sebi’s consultation paper issued in April on reviving the mechanism, which received support from market participants.

The open market buyback route was discontinued in April 2025 amid concerns around unequal treatment of shareholders and issues arising from the prevailing income tax framework. These concerns were subsequently addressed through amendments in the Finance Bill 2024 and changes to the Income Tax Act, 2025. Under the revised framework, open market buybacks will be treated as regular market transactions. Promoters will not be permitted to participate in such buybacks, Sebi said.