Sebi may allow OBPPs to offer Gift City products, tax-saving bonds

Market regulator proposes allowing online bond platforms to offer Gift City products and tax-saving bonds, while also easing compliance norms and seeking public feedback on the changes

The Securities and Exchange Board of India (Sebi) on Tuesday proposed relief measures for online bond platform providers (OBPPs), including permission to offer products and services regulated by the International Financial Services Centres Authority (IFSCA) in GIFT City, and certain tax-saving bond issues under specific sections of the Income Tax Act.

 

At present, OBPPs are allowed to offer products and services regulated by other regulators like Sebi, RBI, Irdai, and PFRDA. However, there were not such provisions for services in GIFT City.

 

Earlier, Sebi had allowed stock brokers to undertake activities in the GIFT City as a separate business unit or subsidiary. As OBPPs are registered with Sebi as stock brokers in the debt segment, there were representations to allow them also.

 

 

OBPPs will have to comply with applicable guidelines under Foreign Exchange Management Act (Fema), 1999, such as Overseas Investment Rules and limits under Liberalised Remittance Scheme (LRS).

 

The market regulator has also proposed to allow OBPPs to offer bonds issued under Section 54EC of the Income Tax Act.

 

These include some tax-saving bonds issued by certain government-owned entities like Power Finance Corporation (PFC), Indian Railways Finance Corporation (IRFC), and REC. Sebi noted that as these bonds are exempted from listing, there is an ambiguity whether OBPPs can offer them on their platforms.

 

OBPPs may be allowed to offer these bonds, with disclosures on eligible issuers, lock-in period, investment limit, non-transferable status, tax features, grievance disclaimer, etc. at the time of offering.

 

Sebi is also considering to streamline the appointment criteria for compliance officers of OBPPs with that of other stock brokers, following recommendations by the Institute of Chartered Accountants of India (ICAI) to allow CAs as compliance officers.

 

The regulator has sought public comments by May 26.