The government has announced comprehensive measures to support businesses facing global volatility, with ₹5,000 crore earmarked specifically for airlines reflecting sector-specific stress. Under the new scheme, lenders are offered a 100% credit guarantee for MSMEs and 90% for non-MSMEs and the airline sector. Finance Minister Sitharaman emphasized that a ministerial committee is reviewing cooking gas availability on a daily basis to ensure uninterrupted LPG supplies despite global disruptions in fuel movement. The minister noted that conflicts involving Ukraine and Russia and the Israel-US-Iran region have affected fertiliser prices and refined fuel logistics, with continuous monitoring aimed at preventing supply shortages from impacting domestic consumers and businesses.
The Securities and Exchange Board of India has proposed significant modifications to the regulatory framework for Online Bond Platform Providers (OBPPs) with the objective of promoting 'ease of doing business' and expanding permissible investment options. According to reports from SEBI, the consultation paper seeks 'comments/views/suggestions from the public' on the proposals related to ease of doing business for Online Bond Platform Providers. The move is intended to 'enhance ease of doing business and provide clarity on permissible products' in the online bond trading space. These technical changes reflect a larger shift in how India's financial system is evolving, as digital bond platforms have begun to change the heavily bank-centric nature of Indian finance by making fixed-income products more visible and accessible to retail investors.
Under SEBI's existing framework under its master circular, Online Bond Platform Providers are currently permitted to offer only specific categories of instruments. As reported by SEBI, these include listed debt securities, municipal debt securities and securitised debt instruments, debt securities and related instruments proposed to be listed through public issues, listed Government Securities, State Development Loans and Treasury Bills, listed Sovereign Gold Bonds, and other products or services regulated by SEBI, RBI, IRDAI or PFRDA. This means OBPPs are currently limited to listed securities or clearly regulated financial products.
Under the current structure, SEBI noted that there is ambiguity around certain instruments, particularly tax-saving bonds under Section 54EC of the Income Tax Act, 1961. These bonds are issued by government-notified entities such as Power Finance Corporation, Indian Railways Finance Corporation and REC Limited, and are used to provide capital gains tax exemption to eligible investors. However, they are exempted from listing requirements under existing regulations, creating uncertainty on whether OBPPs can offer them. The proposal also includes bonds under Section 85 of the proposed Income-tax Act, 2025, and tax-saving bonds issued by state-owned companies, expanding the scope of available tax-saving instruments for retail investors. Officials have received industry representation to re-examine the capital gains tax structure for bonds, with the high-level banking committee examining potential recommendations to CBDT on this front.
The government is looking at ways to increase SME participation in the corporate bond market, as more than 95 percent of bond issuances are currently done through top-rated companies, with SMEs largely excluded from the market. According to Niti Aayog, India's corporate bond market has expanded significantly, with outstanding issuances rising from ₹17.5 trillion in FY15 to ₹53.6 trillion in FY25, recording an annual growth rate of nearly 12 percent and now accounting for around 15-16 percent of India's GDP. The high-level banking committee announced in Budget 2026 will focus on expanding the secondary market for financing small and medium enterprises, with officials considering tweaking the taxation structure for capital gains on corporate bonds, improving the credit profile for SMEs, and securitising SME bond issuances. The committee may examine the idea of a dedicated SME bond platform with lower Electronic Book Provider thresholds so that smaller issuances can also come to market, as the existing framework is better suited for larger issuers.
SEBI has proposed allowing OBPPs to offer products regulated by the International Financial Services Centres Authority (IFSCA), including overseas-listed debt securities linked to GIFT City. According to reports from SEBI, there is currently 'no explicit provision' permitting such offerings, and the proposal is subject to compliance with the Foreign Exchange Management Act, including Overseas Investment Rules and Liberalised Remittance Scheme limits. This expansion creates another channel through which Indian investors can access products tied to international financial markets without leaving the domestic regulatory framework entirely, pushing the opening of India's financial system further. The proposal linked to GIFT City reflects a larger shift toward making India's financial system more open, more digital and more globally connected.
SEBI has proposed that OBPPs must disclose key features of such tax-saving bonds, including eligible issuers, lock-in period, investment limits, non-transferability, tax benefits and application details. As reported by SEBI, it has also mandated a clear disclaimer stating that these are specific tax-saving instruments and that investor grievances will not fall under SEBI's purview, and must be addressed directly to the issuer. This ensures transparency and proper investor protection in the expanded product offerings. For FPIs, the withdrawal of the concessional tax rate of 5 percent on rupee-denominated corporate bonds with effect from July 2025 has reduced their attractiveness, while bond investments lost their attractiveness after the budget of July 2024, where any income from unlisted debentures or bonds is deemed to be short-term capital gains and taxed at the marginal rate irrespective of holding period.
