SEBI mulls allowing OBPPs to offer products regulated by IFSCA, tax-saving bonds

New Delhi: Markets regulator Securities and Exchange Board of India (SEBI) on Tuesday proposed allowing Online Bond Platform Providers (OBPPs) to offer products or services regulated by International Financial Services Centres Authority (IFSCA) and certain tax-saving bonds under the Income Tax Act.

Currently, OBPPs can offer products or securities or services regulated by a financial sector regulator such as SEBI, Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority (PFRDA) .

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However, there is no provision to permit OBPPs to offer products or securities or services that are regulated by IFSCA.

"In view of the request made by IFSCA and to promote ease of doing business, it is proposed that OBPPs may be permitted to offer products or securities or services regulated by IFSCA, in compliance with applicable guidelines under the Foreign Exchange Management Act (FEMA), 1999, including Overseas Investment Rules and limits under the Liberalised Remittance Scheme (LRS)," SEBI said in its consultation paper.

Moreover, OBPPs would offer products, securities, or services regulated by IFSCA in the manner specified for SEBI-registered stock brokers operating within the GIFT-IFSC, the regulator proposed.

Additionally, SEBI has proposed OBPPs be permitted to offer bonds issued under Section 54EC of the Income Tax Act, 1961, as well as under Section 85 of the proposed Income-tax Act, 2025, on their platforms to enhance ease of doing business and provide clarity on permissible products.

SEBI noted that tax-saving 54EC bonds are issued by government-notified entities such as Power Finance Corporation, Indian Railways Finance Corporation and REC , and REC aims to provide capital gains tax exemption to investors.

To safeguard investors, the regulator has proposed that OBPPs disclose key features of such bonds including eligible issuers, lock-in period, investment limits, non-transferability and tax benefits, while offering them on their platforms.

Further, OBPPs will be required to carry a clear disclaimer stating that these are specific tax-saving instruments and that investor grievances related to such bonds will not fall under SEBI's purview, and must instead be addressed to the issuer.

Also, SEBI has proposed to align compliance officer requirements for OBPPs with those applicable to stock brokers, replacing the current mandate of appointing a company secretary with a broader framework under the SEBI (Stock Brokers) Regulations, 2026.

The move follows representations, including from the Institute of Chartered Accountants of India (ICAI), seeking flexibility in appointing compliance officers and greater uniformity across regulatory frameworks.

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The proposals are part of SEBI's broader effort to streamline regulations governing OBPPs and improve operational efficiency in the bond market ecosystem.

The Securities and Exchange Board of India (SEBI) has sought public comments on the proposals till May 26.

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