SEBI Expands Online Bond Platform Scope, Allowing Offering of Tax-Specific Bonds and IFSCA Products

SEBI Expands Online Bond Platform Scope, Allowing Offering of Tax-Specific Bonds and IFSCA Products​

Regulatory Overhaul Promotes Ease of Doing Business in Debt Market​

The Securities and Exchange Board of India (SEBI) has significantly modified the regulatory framework governing Online Bond Platform Providers (OBPPs). The circular, issued on August 14, 2026, aims to bolster ease of doing business within the debt securities market. This move streamlines operations for OBPPs by expanding the permissible list of products and specifying new compliance requirements.

The modification updates Chapter XXI of the SEBI Master Circular concerning Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper (NCS Master circular). These changes follow suggestions received from various stakeholders.

New Scope for Bond Platform Products​

One of the most critical modifications allows OBPPs to offer a wider variety of sophisticated instruments. The updated guidelines permit these platforms to list products regulated by other financial sector authorities. Specifically, OBPPs may now offer securities and services governed by the International Financial Services Centres Authority (IFSCA).

Furthermore, the regulatory update directly addresses the growing segment of tax-focused debt instruments. OBPPs are now permitted to facilitate the offering of Bonds issued under Section 54EC of the Income Tax Act, 1961 or Section 85 of the Income-tax Act, 2025. These bonds can be offered either on a dedicated tab within the platform or via an external website.

Compliance Requirements and Investor Protection​

SEBI has meticulously detailed the responsibilities attached to these new product categories to ensure investor protection. For tax-specific instruments (Section 54EC/85), OBPPs are mandated to provide extensive disclosures to investors. These details include the eligible issuers, the lock-in period, the investment limit, and the non-transferable status of the bonds.

OBPPs must also prominently disclose that investment in these particular instruments is intended for those seeking associated tax benefits, subject to all eligibility criteria set out under the applicable Income-tax Act provisions. Grievance redressal for these specific tax instruments lies with the issuer, not SEBI, a point which OBPPs are required to state explicitly on their platform.

Changes in Compliance Officer Roles and Obligations​

The regulatory framework also introduces necessary changes concerning the compliance officers appointed by OBPP entities. The modified provisions stipulate that an entity must appoint a Compliance officer in line with SEBI (Stock Brokers) Regulations, 2026. This officer must hold certification in NISM Series-III-A: Securities Intermediaries Compliance (Non-Fund) Certification Examination.

The expanded product offerings for OBPPs now include listed debt securities, municipal debt securities, and securitised debt instruments. Additionally, OBPP platforms are permitted to offer other products regulated by SEBI, RBI, IRDAI, IFSCA, or PFRDA, provided they comply with relevant guidelines.

Implications for Stock Exchanges and Market Integrity​

Stock Exchanges have been directed by the circular to take necessary steps for system implementation. They must make required amendments to their bye-laws, rules, and regulations. Furthermore, exchanges are tasked with disseminating this new regulatory circular to all affiliated Stock Brokers through their official websites.

The entire circular aims to promote market development and investor interest protection, operating under the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 55 (1) of the SEBI NCS Regulations, 2021.