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SEBI Plans Mutual Fund Model for Bonds
23 Aug
Summary
- New framework aims to expand retail access to corporate bonds.
- Retail participation in the growing bond market remains limited.
- Proposed model mimics mutual fund distributors for wider reach.
The Securities and Exchange Board of India (SEBI) has introduced a proposal for a new distribution framework designed to broaden retail investor access to corporate bonds and other fixed-income securities. This initiative is modeled after the successful Mutual Fund Distributor system.
The corporate bond market has seen substantial expansion, with outstanding bonds growing from approximately Rs 17.5 trillion in FY15 to over Rs 60 trillion by July 31, 2026. However, despite this growth, retail investors remain underrepresented, with institutional investors largely dominating the market.
SEBI's proposed framework will enlist Fixed Income Channel Partners (FICPs) with stock exchanges. These FICPs will be appointed by Online Bond Platform Providers (OBPPs) to guide investors in understanding, accessing, and transacting in fixed-income products. This aims to address a structural gap in reaching investors outside major urban centers.
To become an FICP, individuals and entities must meet eligibility criteria, including being an Indian citizen, at least 18 years old, holding a Class 12 education, and possessing a valid NISM-Series: Fixed Income Securities certification. FICPs will not be permitted to handle client funds or securities; all orders will be routed directly through OBPP platforms. Remuneration for FICPs will be paid by the appointing OBPP, with client commissions capped at 2.5% of the investment value. The consultation paper was released on August 21, 2026, with public comments due by September 11, 2026.
