The bounce-back of Buy-back

A regulator reversing course within a year is unusual. SEBI's proposal to re-introduce open market buy-backs follows a tax change by Parliament, not a change of mind. My piece in the Financial Express on the reset and the one question it leaves open. My piece, co-authored with Pragya Garg, is in today's Financial Express.

Regulatory reversals are awkward when the premise that justified the original change has disappeared. SEBI’s buy-back framework is in precisely that position.

With effect from 1 April 2025, open market buy-backs through stock exchanges were completely phased out. The discontinuation rested on two concerns: tax neutrality and equitable shareholder treatment. 

On the tax side, companies bore the buy-back distribution tax while selling shareholders faced no tax liability on their gains. On the equity side, SEBI considered the mechanism arbitrary by design. A company’s entire purchase order could be matched against sell orders placed by a handful of shareholders, leaving others without recourse. The two concerns compounded each other: participation was a matter of chance, and those who happened to participate received a tax advantage that others did not. The asymmetry was real, and discontinuation was a defensible response, though removing the most market oriented and transparent process was overkill.

That position has shifted. The Finance Act, 2026 has rationalised the taxation of buy-back proceeds, which are now taxable as capital gains in the shareholder’s hands. The special tax advantage of selling into a buy-back is gone, and with it, a significant part of the rationale for phasing out open market buy-backs through stock exchanges.

SEBI has responded with two consultation papers. The first, dated 2 April 2026, proposes the re-introduction of the stock exchange route. The second, dated 8 May 2026 (“Consultation Paper”), proposes a wider revamp of the SEBI (Buy-back of Securities) Regulations, 2018 (“Buy-back Regulations”). The exercise is an attempt to rebuild the framework, not merely restore what existed before.

The most consequential design choice is the duration of the buy-back window. The Primary Market Advisory Committee (“PMAC”) recommended reinstating the original six-month limit. SEBI takes the view that six months is too long, and itself a source of uncertainty. It has instead proposed a maximum of sixty-six working days, roughly three calendar months, with at least forty per cent of the buy-back size to be deployed in the first half of the offer period. That condition prevents companies from dawdling and then rushing at the end, though fair, may be over-prescriptive.

The reinstatement also lets SEBI clear out structural residue. When the stock exchange route was phased out, exchanges had to maintain a separate trading window to identify shareholders selling into the buy-back so that the tax advantage could be applied to them. With tax parity now established, that identification function is redundant. SEBI proposes to scrap the separate window and let buy-back transactions flow through normal trading. PMAC has also proposed dispensing with the requirement under Regulation 17(i) of the Buy-back Regulations that a company’s identity as a purchaser be displayed on the electronic screen when orders are placed. Both proposals are sensible in the changed context.

The Consultation Paper also closes two gaps that warranted earlier attention. The first concerns promoter conduct. Promoters and their associates are already prohibited from dealing in the company’s securities during the buy-back period, but a prohibition is not the same as prevention. The Consultation Paper proposes to freeze promoter holdings at the ISIN level through depositories, making the restriction structurally enforceable rather than dependent on a disclosure regime.

The second gap concerns Minimum Public Shareholding (“MPS”). The Buy-back Regulations have never explicitly said that a company cannot announce a buy-back if completing it would push public shareholding below the MPS threshold. The two frameworks have existed in parallel without a cross-reference. The proposed explicit cross-reference is good housekeeping.

A significant proposal is the removal of the mandatory merchant banker requirement. At present, every buy-back must engage a merchant banker, regardless of size or complexity. The Consultation Paper proposes to reassign most of those functions to the company, the stock exchanges, and the secretarial auditor, depending on the nature of the activity.

The underlying argument is sound. The securities market has matured considerably since mandatory merchant banker involvement became standard practice. Many of the tasks currently assigned to merchant bankers are procedural, and requiring a paid intermediary for all of them adds cost and friction without commensurate benefit.

The certification that a buy-back offer complies with the Buy-back Regulations, presently provided by the merchant banker, would shift to the secretarial auditor. The quality and independence of secretarial audit practices varies across listed companies, and SEBI would do well to accompany this change with clarity on the scope of that obligation.

PMAC has also recommended, and SEBI has accepted, that companies send an electronic intimation of the buy-back offer to shareholders within one working day of the public announcement. Many retail shareholders do not monitor exchange or company websites daily. A direct communication reduces information asymmetry, which matters for a method where participation depends first on the shareholder knowing the buy-back is open, and second on the shareholder acting on it.

The proposals, read together, are a measured reset. They bring back a tool that market participants found useful while correcting structural weaknesses in the earlier version. The reversal is not the work of an uncertain regulator. It follows from a change Parliament has made to the tax law, and the speed of SEBI’s response reflects changed circumstances, not regulatory inconsistency.

What the framework does not resolve is the question of equitable shareholder participation. Parliament has fixed the tax. The shareholder inequality problem is a different matter. Under the reinstated route, buy-back transactions continue to flow through the open market on a price-time order matching mechanism. A shareholder who wishes to participate has no guarantee that their order will be matched against the company’s purchase order. SEBI appears alive to this, but has not yet offered a structural answer. However, not everything requires regulatory intervention.

 

Fraud, Manipulation and Insider Trading in the Indian Securities Market cited by the Supreme Court of India

Earlier this week the Supreme Court delivered its judgment in Reliance Industries Limited v. Securities and Exchange Board of India (29 May 2026). The Court set aside the finding of fraud under the PFUTP Regulations and the disgorgement of Rs 447 crore, while sustaining the penalty for breach of the position-limit disclosure requirement.

In construing the definition of fraud under Regulation 2(1)(c), the Court observed that the provision, read literally, is so wide as to be unworkable. It relied on the argument in my book, Fraud, Manipulation and Insider Trading in the Indian Securities Market, that on such a reading it is mathematically possible to show that even walking, jogging and cycling are securities frauds. The Court adopted a purposive construction, holding that inducement remains a necessary ingredient of fraud and that concentration of positions is not, by itself, manipulation.

It is a privilege to have the work engaged with at this level. Careful doctrinal writing can, in time, shape how the law is read. My thanks to the Bench for its consideration of the argument.

Gajini KYC - with a memory problem

Verify once, reuse everywhere,  that is the promise of portable KYC, and India has not yet kept it. The infrastructure exists: the CKYCR is live, KRAs have run for over a decade, and the PML Rules contemplate reuse with the client's consent. What is missing is legal comfort, Rule 9(2) leaves intermediaries on the hook even when they rely on a government-operated registry, so they re-verify instead. In our latest piece in the Financial Express, Pranjal Kinjawadekar, Yash Vardhan and I argue that fixing the liability rule and harmonising data standards across regulators will do more for portability than any further build-out of registry infrastructure. The full piece is as below:

An investor who has been verified once should not have to be verified again. That is the promise of portable KYC, and it is a promise the Indian financial system has not yet kept. Speaking at SEBI’s Foundation Day on April 25, Finance Minister Nirmala Sitharaman called on SEBI to deliver a seamless, secure, and portable KYC experience across the financial sector. The architecture to do so is already in statute. What is missing is the operational detail and the liability clarity that would make intermediaries willing to use it.  

India’s KYC obligations originate in the Prevention of Money-Laundering Act, 2002, and the rules framed under it. The Central KYC Records Registry (CKYCR), operated by CERSAI, was set up as a cross-sector repository. Every reporting entity that completes KYC must upload the record and generate a unique identifier, which any other reporting entity can retrieve with the client’s consent. The design is a shared identity infrastructure across the financial system. The practice is not. Duplication and friction persist.

Within the securities market, SEBI established its own infrastructure as early as 2011 through KYC Registration Agencies (KRA), governed by the SEBI (KYC Registration Agency) Regulations, 2011 and the Master Circular on Know Your Client (KYC) norms for the securities market. Under this framework, the first SEBI-registered intermediary onboarding a client conducts due diligence, uploads the records to a KRA, and retains the documents, following which subsequent SEBI-regulated intermediaries retrieve these records instead of initiating the process afresh. The KRA system has been in place for over a decade and has materially streamlined onboarding within the securities market. That said, the framework continues to be subject to certain structural constraints.

The first constraint arises at a cross-sector level. Portability under the KRA framework is confined to SEBI-regulated intermediaries, with no seamless mechanism to extend this across other regulatory domains. As a result, a client whose identity has already been verified by an RBI-regulated bank cannot have those records readily accessed by a SEBI-regulated broker through the same channel. The CKYCR was intended to address this gap and, in principle, provides the necessary bridge. In practice, however, its effectiveness across sectors remains limited. The reasons are operational: data standards are not aligned across regulators and there is no standardised digital consent mechanism for retrieval. This results in investors continuing to re-submit documents at multiple regulatory boundaries.

The second constraint arises within the securities market, at the level of financial groups. A group offering distribution, advisory and broking services typically operates through separate SEBI-registered entities. Each is required to retrieve the client’s KYC record from a KRA on onboarding. Market practice is not uniform. Some groups initiate separate KRA pulls for each entity; others rely on a single pull and share the record internally. Neither approach has clear regulatory backing, and the framework does not settle the point. The result is multiple identical pulls of the same record across a group’s product suite, with cost and delay but no regulatory benefit.

Different categories of KYC information are governed by different sharing rules. Core identity and verification data uploaded to KRAs can be accessed only through a KRA pull. Other due diligence information, such as risk assessments and source-of-wealth documentation, sits outside the KRA framework and may be shared internally under group policies. The boundary is not clearly drawn, and market participants do not apply it consistently. Both constraints reduce to the same point: the records exist, the verification has been done, and what is missing is a mechanism to reuse them.

The Finance Minister’s push must translate into reform at two levels. At the cross-sector level, the CKYCR must be made to work. The infrastructure is in place: CERSAI operates the registry, reporting entities are required to upload to it, and the PML Rules contemplate retrieval by any reporting entity with the client’s consent. What is required is alignment. Data standards across regulators must be harmonised so that a record acceptable to an RBI-regulated bank satisfies a SEBI-regulated broker. The consent mechanism must be standardised and made digitally operable, so the client can authorise retrieval once at onboarding rather than separately for each pull. 

Most importantly, the liability question needs to be addressed directly. Under Rule 9(2) of the PML Rules, a reporting entity that relies on a third party’s due diligence continues to bear full responsibility for compliance with its KYC obligations, even where the underlying records have been verified by a regulated entity and uploaded to a government-operated registry. This allocation creates a disincentive, as intermediaries may prefer to undertake fresh verification rather than rely on third party records. A clear regulatory position is required on the extent to which reliance in good faith on verified CKYCR records can satisfy KYC obligations. Such clarity would materially improve portability, more so than incremental improvements to registry infrastructure.

Within the securities market, SEBI may consider issuing clear guidance on the conditions under which a single KRA pull by one group entity satisfies the obligation for other entities in the same group. Clarity on the distinction between KRA-stored information and other due diligence information, along with the applicable sharing channels for each, would further support consistency in practice. Without this, divergent market practices will persist, with the conservative players bearing unnecessary costs and the aggressive ones operating without a clear legal basis.

Portable KYC is not a technology problem. The registry exists, the records exist, and the statute already contemplates reuse with the client’s consent. What is missing is the legal comfort that reliance in good faith on those records will not be second-guessed. Fix the liability rule, harmonise the data standards, and the rest will follow. The infrastructure has been built. It is time to let it work.

 

Directors Certification Master Class

Closed a session this week at the Indian Institute of Corporate Affairs (IICA) on the Regulatory Framework of Board Governance, as part of the Directors Certification Master Class.

One line I came back to throughout: the standard for an independent director in India is not omniscience. It is contemporaneous diligence, documented at every meaningful decision point.

The shift is unmistakable. SEBI orders in Fortis, Vishal Ahuja, MPS Infotecnics and Edserv Softsystems have moved director liability from a knowledge-based test to a duty-based one. Mechanical approval is now itself the breach. A signature on a fraudulent document is an act, not a formality. The contemporaneous record (written questions, minuted dissent, an executive session with auditors held without management) is the defence.

Add the scale-based RPT materiality framework under the LODR Fifth Amendment, 2025 and the continuous eligibility obligations proposed in the Corporate Laws (Amendment) Bill, 2026, and the operating manual for boards in 2026 looks materially different from the one most directors trained on.

SEBI tightens a rule it wanted to relax

I have a piece in today's Financial Express on an interpretation SEBI has taken with respect to what other businesses a mutual fund manager (AMC) can do. SEBI has, within nine months, told the industry two incompatible things about the same regulation. A consultation paper published in July 2025 conceded that the broad basing requirement had become a barrier to fair competition. An interpretive letter issued in April 2026 made that barrier higher. Below is the full piece:

A rule SEBI said it wanted to relax has, through interpretation, become tighter. On 7 July 2025, the regulator published a consultation paper conceding that the broad basing requirement under Regulation 24(b) of the Mutual Funds Regulations had “proven to be a barrier” and had not provided a level playing field to asset management companies. On 9 April 2026, SEBI issued an interpretive letter that reads the same rule more severely than industry had assumed. The two positions are not easily reconciled.

The letter was issued to UTI Alternatives Private Limited, a wholly owned subsidiary of UTI Asset Management Company that manages three Category-II Alternative Investment Funds. UTI Alternatives asked four questions: does the broad based fund requirement in Regulation 24(b) apply to management services rendered by an AMC subsidiary to an AIF and its schemes; if it does, is compliance tested at the fund level or at the scheme level; in a master-feeder structure where feeders do not take standalone investment decisions, is it enough if only the master is broad based; and does the look-through benefit available to specified foreign portfolio investors under the Master Circular extend to similarly regulated domestic entities such as banks, insurers, and provident fund trusts.

SEBI’s answers, in order, are: yes, scheme level, no, and no. Taken together, they require that every pooled vehicle receiving management services from an AMC subsidiary, at every level of a structure, independently satisfy the 20-investor floor and the 25 per cent concentration cap. No relief is granted for capital intermediated through regulated domestic entities.

The first difficulty is textual. Regulation 24(b) restricts an AMC to “management and advisory services provided to pooled assets including offshore funds, insurance funds, pension funds, provident funds, or such categories of foreign portfolio investor as may be specified by the Board”. The words “broad based fund” do not appear in the main clause. The expression appears in an Explanation that is tethered to a proviso permitting portfolio management services to non-broad based funds. The regulation, read as a whole, distinguishes between “pooled assets” in the main clause and “broad based fund” in the proviso carve-out. SEBI’s own consultation paper recognises the distinction: it proposes to allow AMCs to serve “pooled non-broad based funds”, a category that would be redundant if every pooled asset were, by definition, broad based.

The second difficulty is the scheme-level test. SEBI draws on Regulation 10 of the AIF Regulations, under which each scheme of an AIF is treated as a distinct investment vehicle for registration, corpus, and investor limits. That is a registration and compliance concept under one framework. It does not determine the scope of an AMC’s permissible business under a different framework. Applying a scheme-level test without a clear anti-conflict rationale simply transposes a mechanical threshold across frameworks.

The third difficulty is master-feeder. The letter requires each feeder to independently clear the broad basing criterion, on the reasoning that management services are rendered separately to each. A feeder, by design, is a conduit. It does not take independent investment decisions. The underlying investor base sits at the master level. Insisting on scheme-level broad basing at every layer elevates form over substance, and disturbs arrangements routinely used to aggregate anchor institutional capital before it is channelled into a master vehicle.

The fourth difficulty is the look-through asymmetry. An appropriately regulated foreign portfolio investor gets the benefit of a look-through to its underlying investors. An Indian bank, insurer, or provident fund trust, each supervised intensively by the RBI, IRDAI, or PFRDA, does not. The formal reason offered is that domestic entities sit outside the foreign portfolio investor framework in which the look-through was prescribed. That is true, but it is the wrong way round. Domestic regulated entities are more, not less, supervised than many foreign investor categories that are opaque and still do enjoy the benefit.

The larger point is the collision with SEBI’s own stated direction. The consultation paper of 7 July 2025 recorded that the broad basing requirement “has proven to be a barrier” and had not provided a level playing field to AMCs against other intermediaries managing pooled non-broad based funds. It proposed, as an ease of doing business measure, to permit AMCs to serve such funds, subject to safeguards on differential fees, inter-business transfers, and information access. Before that proposal could take effect, SEBI has interpreted the same regulation to tighten, not ease, the position. Existing Category-II AIF structures built around anchor investors, master-feeder arrangements used for tax or jurisdictional segregation, and mandates drawing on domestically regulated capital are all caught. Independent AIF managers, who sit entirely outside Regulation 24(b), are untouched. The competitive gap the consultation paper sought to close has just widened.

Informal guidance under the SEBI (Informal Guidance) Scheme, 2025 formally binds SEBI only in its dealings with the applicant. In practice it shapes how the industry behaves. A letter that reads words into the main clause of a regulation, transposes a registration concept into a business-scope restriction, and runs against the regulator’s own publicly stated policy direction is not ordinary interpretation. SEBI has published a consultation paper pointing in one direction and an interpretive letter pointing in the other. The way SEBI has interpreted the regulation, now renumbered under the 2026 rewrite, will hurt mutual fund managers and place them at a hugely competitive disadvantage to global players who manage all kinds of pools of funds and SEBI’s preferring ‘broad based’ pools of capital is neither rooted in policy nor in ease of doing business. The only silver lining in the informal guidance is that it does not bar AMCs from managing broad based funds, but only puts certain conditionalities to managing such pools, which are achievable, as importing the proviso to the improper regulation must be imported fully, not partly. 

The Draft IFSCA Market Abuse Regulations

I have a piece with Aniket Singh Charan and Rishabh Jain in today's Financial Express examining IFSCA's Draft Prohibition of Market Abuse Regulations, 2026, proposing to consolidate the insider trading and market fraud frameworks that currently apply in the IFSC into a single instrument. Consolidation is welcome. But the details matter. The full piece is as below:

Consolidating two regulatory regimes into one is the easy part. The harder task is to do so without quietly expanding the reach of either. The International Financial Services Centres Authority's draft Prohibition of Market Abuse in Securities Markets Regulations, 2026 (Draft MAR), released for public comments on 6 March 2026, attempts the consolidation. It proposes to replace the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations) as they apply in the IFSC, folding insider trading and market fraud into a single instrument.

Presently, in the IFSC the PIT Regulations govern the use of unpublished price sensitive information (UPSI), which is information pertaining to a listed entity that is not generally available but which, if made available, would materially affect the price of that entity's securities. Persons who, in the preceding six months, have been associated with a company in a capacity that would allow them access to UPSI are considered “connected persons”. Both connected persons and persons who actually possess UPSI are considered “insiders”.

Insiders are prohibited from communicating, procuring, providing, or allowing access to any UPSI, except in furtherance of legitimate purposes, performance of duties, or discharge of legal obligations. They are also prohibited from trading while in possession of UPSI, save in a narrow range of specified cases. Listed entities, intermediaries, and fiduciaries are required to formulate their own codes of conduct under the PIT Regulations. This framework has been largely continued in the Draft MAR, though the term “material non-public information” (MNPI) is used instead of UPSI. 

The Draft MAR, however, does not prescribe minimum standards for the code of conduct, unlike the PIT Regulations, leaving such standards to be specified later by the IFSCA. This is significant as under the PIT Regulations, the code of conduct applies to Designated Persons, that is, persons so designated by the organisation on the basis of their actual or potential access to UPSI. This typically includes promoters, executive directors, and senior personnel. Designated Persons are subject to higher compliance requirements than other insiders, including obtaining pre-clearance of trades from the Compliance Officer. Under the Draft MAR, unless the same is reintroduced in the code of conduct standards specified by the IFSCA, there may be a move away from the Designated Person framework altogether.

Under the PIT Regulations, disclosures (on a continuing basis) are required from promoters, members of the promoter group, directors, designated persons, and their immediate relatives where trades exceed INR 10 lakh in a calendar quarter, with onward disclosure by the company to the stock exchange. Under the Draft MAR, the threshold is set at USD 25,000 and the obligation is extended to all insiders, making such disclosures mandatory rather than discretionary. This raises concerns, as a strict interpretation would require any person dealing in listed securities to assess whether they qualify as an insider, even without MNPI. If implemented, this should be accompanied by an obligation on listed entities to identify and notify insiders of their responsibilities.

Separately, the PIT Regulations enable an informant to voluntarily disclose information pertaining to insider trading violations to SEBI. Such an informant is protected from retaliation and victimisation, and is eligible for a reward based on the usefulness of the information. This informant mechanism no longer appears in the Draft MAR. Protection and reward of informants is a standard and frequently used mechanism across jurisdictions, and has often led to successful enforcement proceedings. The mechanism ought to be revamped, strengthened, and extended across the IFSCA’s regulatory framework rather than discarded.

The PFUTP Regulations prohibit any person from engaging in four categories of acts in connection with securities: first, dealing in a fraudulent manner; second, employing manipulative or deceptive devices in contravention of securities laws; third, employing any device, scheme, or artifice to defraud; and fourth, engaging in any act, practice, or course of business that operates or would operate as fraud or deceit upon any person. This prohibition is continued in the Draft MAR.

The PFUTP Regulations list certain practices as manipulative or fraudulent, largely covering common-sense prohibitions that are retained in the Draft MAR. However, some additions raise concern. For instance, the Draft MAR treats “cornering of securities to gain control with a view to establish artificial demand or price” as fraudulent. Given that “artificial” is undefined, this could risk misapplication to legitimate large or algorithmic trading strategies based on bona fide market views.

Similarly, the Draft MAR treats “short sell securities in the hope of driving the price down” as fraudulent. However, short selling reflects a legitimate market view and contributes to price discovery. This, along with similar provisions, risks overextending the market abuse framework into areas better addressed through risk controls like position limits. While market integrity is important, not every market impact should be deemed fraudulent given the seriousness of such a charge, it must be defined narrowly and not capture legitimate trading practices.

The Draft MAR also sets out defences to charges of market manipulation and insider trading, broadly in two categories. First, a person may show that they made reasonable inquiries and relied on credible information, which is a fair protection for bona fide conduct. However, this defence should ideally be limited to fraudulent or manipulative practices and not extend to insider trading. Second, a person may argue that their actions were part of legitimate activities such as underwriting, market making, or price stabilisation. While appropriate, these should preferably be excluded from the definition of offences itself, rather than treated as defences to be proved.

The Draft MAR is a welcome step. Consolidating insider trading and market fraud into one instrument is overdue, and much of what it proposes is sound. But market abuse regulation lives in its edges, in how widely the net is cast and how narrowly the defences are drawn. Cornering and short selling are not frauds because a regulator says so, and the Designated Person framework is not a detail to be left to later rule-making. The IFSCA should revisit these before the Draft is finalised. A consolidated regime is worth having. A consolidated regime that overreaches is not.

  

India's Bond Market: The Missing Link

I have a piece with Nishant Prasad and Aniket Singh Charan in today's Financial Express on one area of reform to improve the corporate bond market, ie. focus on distribution. Below the full piece:

Every developed economy has one thing India lacks: a deep, liquid corporate bond market that works alongside banks and equity markets to channel long-term capital efficiently. India’s corporate bond market stood at roughly 14% of GDP in 2023. South Korea’s is at 79%. Malaysia’s is at 54%. Even China, which only began building modern credit markets in the 1990s, sits at 38%. The gap is not a minor statistical curiosity. It is a structural problem with real consequences for how Indian companies fund themselves — and at what cost. And despite years of regulatory effort, the gap has not meaningfully closed.

The issuance data is equally stark. India’s corporate bond issuance has remained below 1% of GDP every year since 2012. The United States issues between 5% and 7.5% of GDP in corporate bonds annually. China averages around 3.5%. Together, the two countries account for more than half of all global corporate bond issuance. India barely registers. The consequence is that Indian businesses — particularly those outside the top credit ratings — remain heavily dependent on bank financing, which is expensive, short-term, and often unavailable to smaller borrowers. This is not how you fund long-term infrastructure or sustain high-growth industries.

SEBI has not been idle. Over the past few years, it has pushed through several targeted reforms. Online Bond Platform Providers (OBPPs) now allow retail investors to buy listed debt securities through digital platforms, which has improved accessibility and brought some transparency to pricing. The Request for Quote (RFQ) platform on exchanges like NSE has created an electronic venue for secondary market trading. The numbers are encouraging: on March 2, 2026, the NSE RFQ platform recorded over 24,000 trades in a single day, up from just 80 trades a day in March 2023. That is a meaningful shift in trading behaviour, even if the overall market remains thin by global standards.

But regulatory action has its limits when the underlying structural problems remain unaddressed. The NITI Aayog’s December 2025 report, “Deepening the Corporate Bond Market,” sets out the issues plainly. Regulatory oversight of the bond market is fragmented across SEBI, RBI, and the Ministry of Corporate Affairs — a situation that creates inconsistency in compliance requirements and slows down market development. The report floats the idea of a dedicated bond market regulator, which is worth debating seriously, but even short of that, better coordination between existing regulators would help. Mandating RFQ usage for entities regulated by the RBI and PFRDA, expanding market-making incentives for NBFCs and banks, and introducing higher trading quotas to improve price discovery are all measures that could move the needle on secondary market liquidity. The infrastructure needs attention too: UPI integration, digital KYC, Aadhaar-based verification, and mobile-friendly platforms could meaningfully expand retail participation if implemented properly.

There is, however, one gap that neither SEBI’s recent reforms nor the NITI Aayog report adequately addresses: distribution. And this matters more than it might seem.

India’s mutual fund industry crossed ₹50 lakh crore in assets under management on the back of a well-developed distribution network. The SIP habit that transformed household savings behaviour did not happen through direct investment platforms alone — it happened because distributors got into living rooms, explained the product, and made investing feel accessible. The portfolio management services and alternative investment fund segments similarly rely on structured distributor relationships. In both cases, industry bodies like AMFI and APMI standardised conduct norms, ran certification programmes, and acted as a bridge between regulators and the market. The results are visible in the scale of participation.

The corporate bond market has no equivalent. OBPPs provide digital access to listed bonds, but their reach stops at the point where a customer needs to be found, educated, and guided toward a fixed-income product. Semi-urban investors, first-time bond buyers, and retail participants who might allocate money to corporate bonds given the right guidance simply have no one to call. There is no regulated class of bond distributors, no certification framework, no conduct norms specific to debt distribution. The last mile is missing.

Creating a structured bond distributor framework under SEBI, or through an industry body with regulatory backing, would address this directly. Eligibility criteria and certification requirements would ensure distributor competence. Conduct norms would protect investors from mis-selling — a concern that has derailed retail participation in other financial products. And a distributor network operating across physical and digital channels could do what platforms alone cannot: build trust, explain risk, and convert passive savers into active bond investors. The framework does not need to be invented from scratch; AMFI’s model for mutual fund distributors offers a ready template that SEBI could adapt for debt securities.

India’s corporate bond market has the regulatory intent and, increasingly, the infrastructure. What it lacks is the human layer — the intermediaries who expand markets not by improving platforms but by reaching the people those platforms cannot find. The mutual fund analogy is instructive precisely because it shows how distribution, not just product design or regulation, determines whether a financial market achieves scale. Fixing the missing link in India’s bond market will not happen through better apps. It will happen when there is someone on the other side explaining why a corporate bond belongs in a retail investor’s portfolio.