Sebi Eases Norms For Online Bond Platforms, Allows IFSCA Products

The Securities and Exchange Board of India (Sebi) has expanded the range of products that online bond platform providers (OBPPs) can offer, allowing them to sell specified tax-saving bonds along with products regulated by the International Financial Services Centres Authority (IFSCA). The changes, aimed at promoting ease of doing business, were announced through a circular dated August 14, 2024. The revised framework will come into effect immediately.

Under the revised rules, OBPPs can offer products, securities, or services regulated by financial sector regulators, including Sebi, the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (Irdai), IFSCA and the Pension Fund Regulatory and Development Authority (PFRDA).

The platforms can also offer bonds issued under Section 54EC of the Income-tax Act, 1961, or Section 85 of the Income-tax Act, 2025. 

For IFSCA-regulated products, OBPPs will have to offer them in the manner specified for Sebi-registered stock brokers operating within GIFT-IFSC. They must also comply with applicable requirements under the Foreign Exchange Management Act, 1999 (FEMA), including Overseas Investment Rules and limits under the Liberalised Remittance Scheme (LRS).

Sebi said such products must be “clearly labelled as international or overseas instruments” to prevent confusion with domestic debt securities. OBPPs will also have to specify the grievance redressal mechanism for these products on their platforms.

Sebi has also laid down specific disclosure requirements for 54EC bonds. These instruments can be offered through a separate tab on an online bond platform or through another website or platform. OBPPs must provide a disclaimer stating that 54EC bonds are tax-specific instruments and that grievance redressal does not lie with Sebi but with the issuer. Platforms will also have to disclose details, such as eligible issuers, lock-in period, investment limits, non-transferable status, tax features, application size and exemption from listing requirements under Sebi's Listing Obligations and Disclosure Regulations (LODR). They must also prominently state that investments in these bonds are meant for investors seeking the associated tax benefits, subject to the eligibility criteria and other conditions under the applicable Income-tax Act provisions.

Sebi has separately changed the compliance officer requirement for OBPPs. The earlier requirement to appoint a Company Secretary as compliance officer has been replaced. Under the revised framework, an OBPP must appoint a compliance officer in accordance with the Sebi (Stock Brokers) Regulations, 2026. The officer must also meet the NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund) Certification Examination requirement prescribed for stock brokers.

“All other provisions” of the Sebi Master Circular on issue and listing of non-convertible securities will remain unchanged, Sebi said.