New Delhi: The Securities and Exchange Board of India (SEBI) has proposed a new distribution framework modelled on the Mutual Fund Distributor (MFD) system to widen retail participation in corporate bonds and other permitted fixed-income securities, particularly among investors in smaller cities and rural areas.
Under the proposed framework, Fixed Income Channel Partners (FICPs) will be enlisted with stock exchanges and appointed by Online Bond Platform Providers (OBPPs) to help investors understand, access and transact in fixed-income products.
SEBI said the corporate bond market has expanded substantially over the past decade, with outstanding corporate bonds rising from around Rs 17.5 trillion at the end of FY15 to more than Rs 60 trillion as of July 31, 2026. Listed corporate bonds account for around Rs 46 trillion, or 76.6 per cent of the overall market.
Despite this growth, retail participation in the corporate bond market remains limited, with debt securities continuing to be accessed largely by institutional investors.
The regulator said the existing OBPP framework has simplified retail access to listed debt securities by allowing investors to compare products and complete transactions through online platforms. This has also been accompanied by a sharp increase in activity on the Request for Quote (RFQ) platform.
According to SEBI, the number of RFQ trades increased from 2.76 lakh in FY25 to 17.84 lakh in FY26, representing a rise of around 546 per cent. The regulator said the increase was driven largely by growing retail participation through OBPPs.
However, SEBI noted that a structural gap remains in reaching investors beyond major urban centres, particularly those in Tier II, Tier III and rural locations.
The regulator said consultations with stakeholders highlighted the role played by MFDs in expanding awareness and access to mutual funds in smaller cities. The proposed FICP framework seeks to adapt that distribution model to the fixed-income market.
Under the proposed system, FICPs would help investors understand the features and risks associated with fixed-income products, complete necessary documentation and access regulated platforms for transactions.
Individuals as well as non-individual entities would be eligible to become FICPs, subject to prescribed conditions. Individuals would have to be Indian citizens aged at least 18 years, have completed Class 12 and hold a valid NISM-Series: Fixed Income Securities certification, among other requirements.
(IANS)
