SEBI Considering Specialised Distributors to Boost Debt Products Access

Securities and Exchange Board of India (SEBI) is examining a proposal to introduce a specialised category of distributors for debt products as part of plans to widen retail participation in bond investments. 

Speaking at an event organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) on Wednesday, SEBI’s Whole Time Member (WTM), Amarjeet Singh, said the regulator is studying whether the distribution model used in mutual funds can be applied to debt market products as well. 

Framework Under Review 

According to Singh, the proposed distributors are expected to assist investors with KYC formalities, documentation, and transaction initiation, similar to the role played by mutual fund distributors. 

He said the proposal is being reviewed to improve the reach of debt products among retail investors and broaden participation in the bond market. 

The comments come at a time when household savings are increasingly shifting towards market-linked financial products. 

Rise in Managed Assets 

Singh said Assets Under Management (AUM) across mutual funds, Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) have recorded a compound annual growth rate of over 19%. 

The combined assets under management across these segments stood at ₹91 lakh crore as of March 2026, he said. 

He also pointed to the role of distributors in the mutual fund industry, noting that nearly 54% of mutual fund assets under management were mobilised through regular plans as of March-end 2026. 

According to Singh, distributors continue to remain the first point of contact for several first-time investors entering financial markets. 

SEBI Flags Mis-Selling Risks 

The SEBI official also raised concerns over mis-selling practices in the financial distribution ecosystem. 

He said an excessive focus on customer acquisition, short-term performance and distribution volumes could lead to unsuitable product recommendations for investors. 

Singh added that mis-selling may not immediately result in complaints, as investors often realise much later that products sold to them were not aligned with their financial needs. 

He also cautioned against investment decisions being influenced by social media trends and momentum-driven behaviour, stating that market participation should be based on informed decision-making and long-term financial planning. 

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Conclusion  

The regulator’s proposal seeks to strengthen retail access to bond investments while placing focus on transparency and suitability in distribution practices. 

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