SEBI Consultation Paper on Online Bond Platform Providers

The Securities and Exchange Board of India (SEBI), through its Consultation Paper dated May 5, 2026, has proposed significant modifications to the regulatory framework governing Online Bond Platform Providers (OBPPs) under Regulation 51A of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, governing the registration of online bond platform providers. Regulation 51A was inserted through the SEBI (Issue and Listing of Non-Convertible Securities) (Second Amendment) Regulations, 2022 notified on November 9, 2022, relating to Online Bond Platform Providers.

The framework was subsequently streamlined through the SEBI Circular dated November 14, 2022  prescribing the registration and regulatory framework for OBPPs, including eligibility conditions. Further, the SEBI Circular dated June 16, 2023 mentioned adherence to Regulation 51A by the OBPPs in relation to product offerings, and the SEBI Circular dated December 28, 2023 on modifications to provisions of Chapter XXI of the NCS Master Circular dealing with registration and regulatory framework for OBPPs.

Earlier, SEBI had issued a consolidated Master Circular on May 22, 2024 governing non-convertible securities and related instruments. Subsequently, SEBI issued the Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated October 15, 2025 (“NCS Master Circular”).

In November last year, SEBI had also issued a press release cautioning the public regarding unregistered Online Bond Platform Providers. It observed that certain entities, including fintech companies and stock brokers, were offering services in the nature of OBPPs without obtaining due registration.

The consultation paper proposes amendments to the October 15, 2025 master circular and public comments by May 26, 2026, on measures intended to promote ease of doing business. The proposals are based on recommendations of Corporate Bonds and Securitisation Advisory Committee (CoBoSAC).

Proposal 1: Permitting IFSCA-Regulated Products on OBPP Platforms

Clause 5.2.5 of Chapter XXI of the NCS Master Circular already permits OBPPs to offer products regulated by financial regulators such as SEBI, RBI, IRDAI and PFRDA. However, the framework does not expressly permit OBPPs to offer products regulated by the International Financial Services Centres Authority (IFSCA).

SEBI noted representations seeking permission for OBPPs to offer IFSCA-regulated products, particularly overseas listed debt securities through a regulated framework in IFSC. SEBI also observed that stockbrokers are already permitted to undertake securities market related activities within Gujarat International Finance Tec-City IFSC through Separate Business Units (SBUs) or subsidiaries.

Accordingly, SEBI has proposed permitting OBPPs to offer IFSCA-regulated products subject to compliance with Foreign Exchange Management Act (FEMA), 1999, including Overseas Investment Rules and Liberalized Remittance Scheme (LRS) limits. The draft amendments further propose that such IFSC related- products may be offered through separate tabs, sections or websites to maintain segregation between SEBI-regulated products and products regulated by other financial sector regulators. OBPPs would also be required to disclose the grievance redressal mechanism applicable to such products.

Proposal 2: Offering Tax-Saving Bonds Through OBPPs

The consultation paper further proposes permitting OBPPs to offer tax-saving bonds issued under Section 54EC of the Income Tax Act, 1961 and Section 85 of the Income-tax Act, 2025, which provide capital gains tax exemption upon investment in specified bonds.

The existing OBPP framework permits platforms to offer listed debt securities, municipal debt securities, securitised debt instruments, government securities, sovereign gold bonds and other products regulated by financial sector regulators. However, Regulation 62A(4)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 exempts bonds issued under Section 54EC of the Income Tax Act, 1961 from mandatory listing requirements, giving rise to ambiguity regarding whether such instruments may be offered on OBPPs.

SEBI observed that entities such as the Indian Railway Finance Corporation (IRFC), the National Highways Authority of India (NHAI), the Rural Electrification Corporation (REC) and the Power Finance Corporation (PFC) issue such bonds pursuant to notifications issued by the Central Government. Accordingly, to provide regulatory clarity and facilitate ease of doing business, SEBI has proposed permitting OBPPs to offer such bonds on their platforms.

Under the proposed framework, OBPPs would be required to make appropriate disclosures regarding the lock-in period, investment limits, tax exemptions, transfer restrictions, application size and other material features of such bonds. OBPPs would also be required to display disclaimers stating that such instruments are specific tax-saving instruments and that grievances relating to such investments should be directed to the issuer concerned.

Proposal 3: Review of Compliance Officer Requirements

The consultation paper also proposes changes to the framework governing the appointment of compliance officers by OBPPs. Presently, Clause 1.1 of Annexure XXIA of the NCS Master Circular requires an OBPP to appoint a qualified company secretary as a compliance officer. SEBI noted that this differs from Regulation 17 of the SEBI (Stock Brokers) Regulations, 2026, which prescribes requirements relating to the appointment of a compliance officer by stockbrokers. 

SEBI also noted representations received from the Institute of Chartered Accountants of India (ICAI), stating that similar mandatory requirements have not been prescribed for other intermediaries such as merchant bankers, investment advisers and research analysts. Accordingly, SEBI has proposed aligning the compliance officer requirements applicable to OBPPs with those prescribed for stockbrokers under the SEBI (Stock Brokers) Regulations, 2026.