The Securities and Exchange Board of India (Sebi) on Friday proposed introducing a network of Fixed Income Channel Partners (FICPs) to expand retail participation in corporate bonds, particularly in smaller cities.
FICPs will be enlisted with stock exchanges and appointed by Online Bond Platform Providers (OBPPs) to distribute permitted fixed income securities and facilitate transactions.
The proposal seeks to replicate aspects of the mutual fund distributor model, which Sebi said had helped deepen access to mutual fund products in smaller cities.
Sebi’s push on distribution follows multiple reforms proposed earlier this month to develop the bond market. These include measures to ease debt-listing norms and a colour-coded “Credit Risk-o-Meter” mandatory for debt securities to help investors.
Sebi had earlier proposed doing away with the requirement for issuers to mandatorily list all outstanding unlisted non-convertible debt securities issued after January 1, 2024, at the time of first listing. Its consultation paper also proposed to ease fundraising constraints by relaxing International Securities Identification Number caps.
Among other measures to develop the bond segment, Sebi is also exploring a pilot to test tokenisation.
The focus on distribution comes as the market remains largely institutional, with retail participation relatively low. The corporate bond market has expanded significantly, with outstanding issuances rising from ₹17.5 trillion at the end of FY15 to more than ₹60 trillion as of July 31, 2026.
“Around 98 per cent of corporate bonds in India are privately placed and therefore tend naturally to reach institutional investors. Broadening participation will require an effective and responsible distribution architecture,” Amarjeet Singh, whole-time member of Sebi, said a day earlier at a conference on bonds.
Under the proposed framework, individuals and entities will be eligible to become FICPs. They will be subject to criteria such as a minimum Class 12 qualification, good reputation, absence of convictions involving fraud or dishonesty, and a valid fixed-income certification from the National Institute of Securities Markets (NISM).
Distributors registered with the Association of Mutual Funds in India will be eligible to apply without paying an enlistment fee, subject to the relevant NISM certification.
“The most powerful part of this framework is that it leverages an existing distribution network for investment products. Over a lakh MF distributors have spent two decades earning trust in Tier-II and Tier-III India, and the FICP route lets them extend that relationship to fixed income with just a NISM certification,” said Nikhil Aggarwal, founder & group chief executive officer, Grip Invest.
“Plug those existing distribution rails into technology platforms that already handle discovery, KYC and settlement, and bonds can reach every Indian investor in a fraction of the time it took mutual funds,” he added.
FICPs will be allowed to work with multiple OBPPs, but will not be permitted to handle client funds or securities.
Client orders will be routed directly through the OBPP platform. FICPs will assist with client onboarding, documentation, KYC and facilitating transactions.
OBPPs, meanwhile, will be responsible for due diligence, supervision and monitoring of FICPs, including risk-based inspections.
They will also be responsible for the acts and omissions of their appointed FICPs and required to monitor unusual activity, investor complaints and data security.
Sebi has proposed that FICPs receive remuneration only from the appointing OBPP, through commission sharing, and not charge clients directly. Fees, brokerage or commissions charged to clients will be capped at 2.5 per cent of the investment value.
