After the success of mutual fund SIP as a reliable tool of wealth creation among Indian retail investors, SEBI has come up with a consultation paper around a new concept – Bond SIP, according to the industry experts.
This means that the MFDs can very soon have a new weapon in their arsenal, helping them with more complete solutions for their clients’ portfolios.
IndiaBonds, which is one of the major Online Bond Platform Providers, expects SEBI’s proposed framework for fixed income distribution partners to be a game changer for India’s retail bond market.
Mutual fund distributors looking to service the entire investment portfolio of their clients should consider expanding into bond distribution, said Vishal Goenka, Co-founder, IndiaBonds.
In an interaction with Cafemutual, Goenka said that bond SIPs can enable disciplined investment in fixed income while helping investors diversify their portfolios and build an appropriate debt allocation.
“Distributors have played an instrumental role in expanding the penetration of mutual funds. If they now want to service their clients’ entire portfolios, they need to start taking an interest in bond SIPs. This can help them scale their businesses while improving portfolio diversification for their clients,” he said.
SEBI framework may formalise bond distribution
Goenka said that the idea gains significance in the context of SEBI’s proposed framework for Fixed Income Channel Partners, or FICPs.
The regulator had earlier floated a consultation paper aimed at creating a formal framework for entities involved in the distribution of corporate bonds. The broader objective is to improve retail investors’ access to a market that has traditionally remained dominated by institutional participants.
According to industry sources, SEBI’s proposed regulations could be broadly similar to the mutual fund distribution framework. Fixed income distribution partners will be required to clear a relevant NISM certification examination.
Industry sources also said that the proposal has received the approval of SEBI’s Corporate Bonds and Securitisation Advisory Committee, commonly known as CoBoSAC, while the final regulations may be issued over the next few months.
Goenka said IndiaBonds is excited about the regulatory developments and believes that a formal distribution ecosystem could transform the Indian bond market.
“Distributors will play a very important role in broad-basing the bond market, scaling participation, spreading awareness and improving the adoption and utilisation of bonds among Indian investors,” he said.
How IndiaBonds’ bond SIP works
IndiaBonds, a SEBI-registered OBPP, currently offers two broad options under its bond SIP facility.
Its moderate-yield option comprises bonds rated AA- and above and offers indicative yields ranging from 7.5% to 9.5%. The minimum SIP amount under this option is Rs.10,000.
The high-yield option offers indicative yields ranging from 10% to 12% and has a minimum investment amount of Rs.1 lakh. Goenka said that IndiaBonds does not display bonds carrying ratings below BBB+.
However, please note yields are indicative and not assured. Investors must evaluate the issuer’s creditworthiness, liquidity, maturity profile and the possibility of default before investing.
The platform also provides features such as a bond directory, yield calculator, portfolio tracking and BondCase, which is a curated combination of bonds based on specified investment themes.
Secondary-market transactions gather pace
Goenka said that activity in the secondary bond market has accelerated amid recent market uncertainty, highlighting the need for such initiative.
According to him, the annual number of secondary-market bond transactions averaged around 12 lakh between 2020 and 2025. But, this increased to approximately 24 lakh in FY2025-26.
Based on the activity recorded during the first three months of FY2026-27, Goenka expects the number of transactions to cross 40 lakh during the current financial year.
On credit risk, he said that India’s bond default rate is around 0.2%, compared with approximately 3% in the US. In cases of default, investors and trustees can pursue available legal and recovery mechanisms, including proceedings under the Insolvency and Bankruptcy Code and before the NCLT.
Goenka believes that the combination of bond SIPs, growing secondary-market activity and a regulated distribution framework can make fixed income more accessible to retail investors.
For MFDs, this could create an opportunity to move beyond mutual funds and offer a more comprehensive portfolio solution, particularly to clients seeking regular income, capital preservation and diversification from equity-market volatility.