Summary of this article
Sebi has proposed to broaden range of products of OBPPs
OBPPs can include overseas bond products listed in GIFT-IFSC
The Securities and Exchange Board of India (Sebi) has proposed significant reforms to expand the offerings of Online Bond Platform Providers (OBPPs), in a bid to increase retail participation in India’s debt market. Sebi has suggested allowing these bond platforms to offer products regulated by the International Financial Services Centres Authority (IFSCA), and include overseas-listed bonds in the GIFT-IFSC.
At present, OBPPs are allowed to only offer domestic securities regulated by Sebi or the Reserve Bank of India (RBI). The proposed reforms seek to allow these platforms to offer overseas debt products, broadening the scope of investment opportunities for investors. This move aims to align the capacity of OBPPs with those of stockbrokers operating within IFSCs.
Market experts view this proposal as a natural evolution of the ecosystem. “This is a natural extension of the evolving online bond platform ecosystem…If implemented, it can widen market participation by enabling investors with funds under the Liberalised Remittance Scheme (LRS) to allocate to overseas bonds through regulated platforms,” said Vineet Agrawal, co-founder of an OBPP, Jiraaf.
While initial interest in these products is expected to come primarily from high net-worth individuals (HNIs) and ultra HNIs, experts believe this is a critical long-term step in broadening the retail participation base, as awareness of global fixed-income products grows.
In its consultation paper, Sebi also said that it aims to address regulatory ambiguity surrounding tax-saving bonds, particularly those issued under Section 54EC of the Income-tax Act, 1961. These bonds, often issued by public-sector entities, such as Rural Electrification Corp. (REC), Power Finance Corp. (PFC), and Indian Railway Finance Corp (IRFC), are generally unlisted, creating uncertainty regarding their sale on digital platforms.
The expansion into new overseas products is seen complementing traditional debt instruments, rather than cannibalising the space.
“Sebi’s consultation paper for OBPPs can help broaden the market by bringing in new categories of investors and expand product access. Overseas bonds are likely to complement, not replace, domestic debt products,” Agrawal said.
The inclusion of 54EC bonds—popular for capital gains tax savings—is also seen as a major win for retail investors. “Allowing 54EC bonds on OBPPs is a strong positive step, as it helps investors deploy capital gains in a more tax-efficient manner and is likely to see high retail demand,” Agrawal added.
However, the transition could see certain regulatory and technical challenges for OBPPs. These platforms will need to build robust processes to handle FEMA compliance, LRS limits, and overseas investment rules. For unlisted 54EC bonds, Sebi has also proposed strict disclosures regarding lock-in periods and investment limits to protect investors, which also need to be followed by OBPPs.
While these changes reflect a leap forward towards easing investments across market segments, experts say that "investor education, transparent disclosures, and strong compliance standards will be critical for responsible market development." The regulator has invited public comments on these proposals until May 26, 2026.
