SEBI is looking at how it can use this specialised category of distributors to expand the investor base and promote the retailisation of bonds
FinTech BizNews Service
Mumbai, 13 May 2026: The Securities and Exchange Board of India is examining a proposal to create a specialised category of distributors dedicated to expanding retail access to debt securities and corporate bonds, Mr Amarjeet Singh, Whole Time Member of SEBI, announced at the FICCI Financial Products Distribution Summit in Mumbai.
Mr Singh said the new distributor category, modelled on the mutual fund distribution framework, would simplify the investment process for retail investors by assisting with KYC formalities, documentation and transaction initiation. "We are looking at how we can use this specialised category of distributors to expand the investor base and promote the retailisation of bonds," he said.
The announcement came as Mr Singh also pressed the industry to accelerate uptake of the Choti SIP, noting that the scheme had yet to achieve the traction its potential warranted. "There is a lot of scope for scaling it up. We need to see more traction there," he said, drawing a parallel with the transformative success of the conventional mutual fund SIP model.
The twin signals — a new distribution architecture for bonds and a renewed push for micro-SIPs — framed Mr Singh's broader inaugural address at the summit, which brought together senior figures from across India's capital markets ecosystem. PwC India simultaneously released a joint knowledge paper with FICCI examining the structural shifts reshaping India's financial distribution landscape.
Mr Singh placed both his regulatory announcements in the context of this inclusion agenda. Combined assets under management across mutual funds, portfolio management services and alternative investment funds have grown at a compound annual rate of over 19 per cent, reaching ₹91 lakh crore as of March 2026. Yet SEBI's own investor survey reveals that while 53 per cent of households are aware of mutual funds or exchange-traded funds, only 6.7 per cent actively invest — a figure that falls to around 4 per cent in rural India. "Distribution determines whether finance remains concentrated in a few hands or whether it truly becomes a vehicle for broad-based economic participation," he said.
On conduct risk, Mr Singh offered an unusually candid assessment. Mis-selling, he cautioned, was often "passive" in nature — investors might discover only years later that an unsuitable product had been recommended, and frequently lacked the motivation to complain. Official complaint data, therefore, understated the true scale of the problem. SEBI's shift towards trail-based commission structures was designed to align distributor incentives with long-term investor outcomes rather than reward one-time customer acquisition. He urged the industry to move beyond AUM as the sole measure of success, proposing metrics such as investor persistence across market cycles and quality of grievance redressal instead.
Mr Navneet Munot, Managing Director and Chief Executive of HDFC Asset Management Company and Summit Co-Chair, pointed to monthly SIP flows surpassing Rs31,000 crore even amid global market volatility as evidence of the resilience that regulators and distributors had collectively built. With only six crore unique investors currently in the system, he said the distribution community's most consequential work lay ahead. "Finance must be for the ultimate good of society," he said.
Mr Neeraj Choksi, Co-founder of NJ Group and Summit Co-Chair, argued that last-mile reach in tier-2 and tier-3 cities could not be achieved through technology alone, noting that the mutual fund industry had only two lakh ARN holders against over 80 lakh registered insurance agents — a structural gap that demanded urgent attention. Human connection remained indispensable, he said, for first-time investors making significant financial decisions.
Setting the context, Ms Sonia Dasgupta, Co-chair of the FICCI Capital Markets Committee and Managing Director and Chief Executive Officer of Investment Banking at JM Financial Limited, described India as standing at "a defining moment" in its financialisation journey. Over the past decade, she noted, the mutual fund industry's assets under management had grown more than six-fold to over ₹81 trillion, while the number of unique mutual fund investors had risen from nearly one crore to over six crore. In a milestone she described as more than merely statistical, domestic institutional investors — driven largely by mutual funds and growing retail participation — had overtaken foreign portfolio investors in ownership of NSE-listed companies, reflecting a structural shift towards domestically anchored, long-term capital formation.
Yet Ms Dasgupta was equally direct about the unfinished agenda. She noted that the gap between investor awareness and participation defined the industry's central challenge. "The next phase of growth cannot be driven by access and onboarding alone. It must be built on trust, investor confidence, suitability and long-term financial outcomes," she said, calling for the conversation to shift decisively "from penetration to persistence, from simply acquiring investors to enabling disciplined long-term investing behaviour."
Mr Vivek Prasad, Chief Commercial Officer and Financial Services Leader at PwC India, presenting the joint knowledge paper, noted that 40 per cent of new investors on NSE were under the age of 30, and argued that distribution must evolve into "the control layer that shapes investor decisions, behaviour, confidence and ultimately financial outcomes." The winners in this space, he said, would be those who could "combine access with guidance, technology with judgment and growth with accountability."
