New Delhi, June 14 -- The capital market regulator's new rules for continuous monitoring and third-party verification of ESG-labelled bonds could raise compliance burden and deter participation of mid-sized firms, experts said.

The Securities and Exchange Board of India's (Sebi's) circular, effective 5 June, aims to combat "purpose-washing" or the misrepresentation or exaggeration of the social or environmental intent behind ESG bond proceeds. The framework to ensure such debt issuances remain aligned with clearly stated and measurable goals brings India's regulatory stance closer to global standards.

"By incorporating factors like third-party verification, comprehensive disclosures about the issuer decision-making process, project sele...