The Securities and Exchange Board of India (SEBI) has announced a set of proposed changes to the regulatory framework governing Online Bond Platform Providers (OBPPs). The primary objective is to enhance the offerings available through these platforms by allowing them to offer products regulated by the International Financial Services Centres Authority. This change would facilitate access to overseas-listed debt securities via the Gujarat International Finance Tec-City (GIFT-IFSC).
Currently, OBPPs are restricted to distributing only those products regulated by domestic authorities such as SEBI and the Reserve Bank of India. SEBI’s proposal would align OBPPs with stockbrokers, who are permitted to operate in IFSCs.
In a consultation paper released on Tuesday, SEBI has invited public feedback by May 26 on three significant proposals that aim to broaden product offerings, simplify compliance requirements, and enhance the ease of doing business within the rapidly expanding retail bond market.
One of the notable suggestions includes permitting OBPPs to offer tax-saving bonds issued under Section 54EC of the Income Tax Act, as well as equivalent provisions under the new Income-tax Act. These bonds, issued by state-backed entities like the Power Finance Corporation Ltd, Indian Railway Finance Corporation Ltd, and REC Ltd, are presently exempt from mandatory listing requirements, adding some uncertainty regarding their eligibility on bond platforms.
SEBI’s proposal would allow for the distribution of these bonds with appropriate disclosures regarding aspects such as lock-in periods, investment limits, and tax benefits, alongside disclaimers clarifying that any investor grievances will be directed to the issuer rather than SEBI.
Additionally, the regulator has suggested revising the norms regarding the appointment of compliance officers by OBPPs. Currently, OBPPs must appoint a company secretary as their compliance officer. SEBI plans to align this requirement with stockbroker regulations, which do not specify a particular professional qualification, following requests from industry bodies, including the Institute of Chartered Accountants of India.
SEBI stated that these proposed changes are based on recommendations from its advisory committee, feedback from stakeholders, and an internal review of the OBPP ecosystem. The regulator emphasized that these reforms aim to eliminate operational uncertainties while expanding investment opportunities for retail participants in the bond market.
The consultation paper is open for public comments until May 26, 2026.
