SEBI has released a proposal to introduce 'Fixed Income Channel Partners' (FICPs) to make it easier for retail investors in smaller cities to buy corporate bonds. The move aims to expand distribution channels through online bond platforms and tap into India's ₹60 lakh crore corporate bond market. Public comments on the new framework are open until September 11, 2026.
The Securities and Exchange Board of India (SEBI) is looking to change how retail investors access corporate bonds. In a new consultation paper, the regulator has proposed a framework to create 'Fixed Income Channel Partners' (FICPs). These partners would act as intermediaries to help bring more individual investors into the bond market, specifically targeting Tier-II and Tier-III cities where access has historically been limited.
The proposal seeks to replicate the success of the mutual fund distribution model, where distributors have played a significant role in reaching households across the country. As of July 31, 2026, India's outstanding corporate bond market has grown significantly to over ₹60 lakh crore, up from ₹17.5 lakh crore in fiscal year 2015. Despite this rapid growth, the market remains heavily dominated by institutional players like banks, insurance companies, and large funds. This new framework aims to bridge the gap between retail investors and the corporate bond market by utilizing Online Bond Platform Providers (OBPPs).
Under the proposed rules, both individuals and non-individual entities could register as FICPs. To ensure professional standards, the framework requires individuals to be at least 18 years old and hold a valid NISM Series: Fixed Income Securities certification. For those already working as mutual fund distributors, the process may be smoother, with an exemption from the enlistment fee provided they clear the necessary certification.
To protect investor interests, SEBI has included strict guidelines on how these partners operate. FICPs will only be allowed to assist with tasks like client onboarding, documentation, and explaining bond features. They are strictly prohibited from handling client funds or securities. All orders must be routed through the OBPP, and FICPs are barred from receiving or paying money on behalf of clients. Furthermore, any compensation for these partners must come solely from the OBPP that appoints them, with a proposed cap on commissions at 2.5 percent of the investment value. Clients will not be permitted to be charged directly by the FICP.
While the proposal is designed to improve accessibility, there are factors for investors to watch. The rules are still in the consultation phase, meaning the final guidelines could change before implementation. Investors should also be aware that the bond market carries its own risks, including liquidity concerns and price volatility, which may differ significantly from equity investments. The success of this framework will depend on how effectively the OBPPs can manage their partner networks and whether retail investors find corporate bonds a suitable addition to their portfolios.
The regulator has invited public feedback until September 11, 2026. Following this period, SEBI will review the comments before finalizing the guidelines. The next key update will be the official release of the final circular, which will outline the operational start date and any adjustments to the current proposal.