SEBI and RBI Fast-Track FPI Onboarding and Bond Market Reforms to Deepen Secondary Liquidity — September 30, 2026

The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are working in close institutional coordination to streamline foreign portfolio investor (FPI) access and build secondary liquidity across the Indian corporate bond market.

Addressing market participants, SEBI Chairman Tuhin Kanta Pandey highlighted that regulatory convergence between the capital markets watchdog and the central bank is critical to lowering entry barriers, digitising compliance workflows, and transforming domestic debt markets from a traditional "hold-to-maturity" structure into an active, liquid trading ecosystem.

Accelerating FPI Inflows and Digital Onboarding

SEBI's approach toward global capital focuses on reducing friction across the complete investment cycle. Pandey noted that FPI assets under custody (AUC) in India have reached approximately ₹78 lakh crore (around $800 billion), underscoring the necessity of competitive and seamless entry mechanisms.

To address documentation bottlenecks, SEBI and the RBI are collaborating on several digital infrastructure enhancements:

• Expedited Custodian Turnaround: Through API integrations and digital workflows, custodians have compressed registration timelines to just five business days.
• SWIFT Document Verification: The RBI is examining proposals to allow FPI registration documents to be uploaded directly via the SWIFT network, eliminating manual layers.
• Elimination of Consularization: Utilization of digital signatures, e-PANs, and e-Power of Attorney across eligible jurisdictions has significantly reduced dependencies on physical notarisation and consular verification.
• Correspondent Banking Certification: The RBI has notified operational measures permitting overseas branches of Indian banks with correspondent banking arrangements to certify documents directly.
• Targeted Investor Channels: The SWAGAT-FI framework for trusted, low-risk global investors has onboarded roughly 205 FPIs since becoming operational on June 1, 2026.

In parallel, SEBI has expanded the investment scope for foreign institutions by permitting FPI access to depository receipts of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), as well as broadening their participation in non-agricultural commodity derivatives.

Deepening India's ₹58-Trillion Corporate Bond Market

While India's corporate bond issuances have expanded at a 12% compound annual growth rate (CAGR) over the last decade to reach ₹58 trillion by December 2025, outstanding bonds account for only about 16% of gross domestic product (GDP). This lags emerging and developed peers such as China (38%), Malaysia (54%), and South Korea (79%).

Furthermore, out of more than 5,600 listed equity companies in India, only around 770 corporate entities have tapped the debt market for financing, reflecting a concentrated issuer base alongside an institutional tendency to hold bonds over-the-counter until maturity.

To solve these persistent liquidity and depth challenges, SEBI and the RBI are pushing forward structural debt market mechanisms:

Key Interventions Underway in Debt Markets:

• Market-Making Framework: Regulators are formalizing continuous two-way quoting mandates to reduce bid-ask spreads and support transparent secondary market price discovery.
• Exchange-Traded Bond Indices: The RBI has provided draft guidelines and agreed in principle to allow corporate bond indices to be traded on stock exchanges, paving the way for index derivatives and Total Return Swaps (TRS).
• Broadening Retail Access: Minimum investment lot sizes have been lowered from ₹1 lakh to ₹10,000, supported by Online Bond Platform Providers (OBPPs) and proposed Fixed Income Channel Partners to democratize individual participation.
• Liquidity Backstops: Operational instruments like the Corporate Debt Market Development Fund (CDMDF) and pre-maturity Liquidity Window facilities are functioning alongside the limited-purpose repo clearing corporation, which cleared trades worth ₹770 billion in January 2026 alone.

Pandey stressed that while banks will remain the backbone of project finance and credit evaluation, India's economic expansion and infrastructure targets require a strong corporate debt market operating alongside the banking sector. Joint regulatory alignment between SEBI and the RBI is designed to build that complementary, resilient capital architecture.

Tags: SEBI RBI FPI Corporate Bond Market Fixed Income Tuhin Kanta Pandey