SEBI Opens GIFT City Bond Products to Online Platforms in Major Market Expansion

What SEBI Proposed

SEBI proposed allowing OBPPs to offer products regulated by the International Financial Services Centres Authority (IFSCA) in GIFT City. Previously, OBPPs were only authorized to offer products regulated by SEBI, RBI, IRDAI, and PFRDA, with no provisions for GIFT City services.

Stock brokers had already been permitted to undertake activities in GIFT City as separate business units or subsidiaries, and since OBPPs are registered with SEBI as stock brokers in the debt segment, there were representations to extend the same permissions to them.

Tax-Saving Bond Clarification

SEBI proposed allowing OBPPs to offer bonds issued under Section 54EC of the Income Tax Act, including tax-saving bonds from government entities like Power Finance Corporation (PFC), Indian Railways Finance Corporation (IRFC), and REC. SEBI noted that because these bonds are exempt from listing requirements, there was ambiguity about whether OBPPs could distribute them.

OBPPs offering these bonds would need to provide disclosures on eligible issuers, lock-in periods, investment limits, non-transferable status, and tax features at the time of offering.

Compliance Officer Standards Alignment

SEBI proposed streamlining compliance officer appointment criteria for OBPPs to align with other stock brokers, following recommendations by the Institute of Chartered Accountants of India (ICAI) to allow Chartered Accountants as compliance officers. Currently, OBPPs are mandated to appoint a Company Secretary as compliance officer, a condition not uniformly applied across other SEBI-regulated intermediaries.

Who Initiated the Change

The proposal follows a request from the International Financial Services Centres Authority (IFSCA), which regulates financial centers including GIFT City, asking SEBI to allow online bond platforms to offer IFSCA-regulated products and align regulatory frameworks with those applicable to stock brokers operating in GIFT City.

Impact on OBPP Growth

By January 2026, 29 OBPPs were registered with SEBI, facilitating over ₹10,000 crore in fixed-income investments. These platforms lowered entry barriers by reducing the minimum face value for debt securities to ₹10,000, making bonds more accessible to retail investors who previously faced high minimums and complex processes.

The proposed changes would significantly expand Indian investors' access to overseas-listed debt securities and provide more diverse investment options while improving capital market links.

GIFT City Context

GIFT City is India's first International Financial Services Centre (IFSC) and a platinum-rated Greenfield Smart City. The initiative represents a key move to strengthen Gujarat's GIFT City as a growing global finance hub, with the goal of broadening the range of financial products available via domestic platforms while aligning with global standards to draw more financial activity and investment to the special economic zone.

Next Steps and Timeline

SEBI sought public comments on the proposal by May 26, 2026. As of July 2026, the consultation period has closed and SEBI is expected to review stakeholder feedback before finalizing the regulatory framework. Implementation timeline and finalized rules have not yet been announced by the regulator.