SEBI’s proposed FICP framework could give MFDs a new opportunity to distribute corporate bonds and other fixed-income products. Here’s what MFDs need to know about eligibility, certification, OBPPs and commission.
Mutual Fund Distributors (MFDs) could soon get another opportunity to expand their business beyond mutual funds.
The Securities and Exchange Board of India (SEBI) has proposed a new framework for Fixed Income Channel Partners (FICPs), under which eligible MFDs could distribute corporate bonds and other permitted fixed-income securities through Online Bond Platform Providers (OBPPs).
The proposed framework could give MFDs access to a new product category while allowing them to leverage their existing investor relationships.
For investors, it could make corporate bonds and other fixed-income products more accessible through distributors they already know and trust.
What is the SEBI FICP framework?
The Fixed Income Channel Partner (FICP) framework is a proposed SEBI framework for distributing fixed-income securities through Online Bond Platform Providers.
Under the proposed framework, eligible individuals and entities can become FICPs after completing the prescribed certification and enlistment requirements.
The FICP will act as the investor-facing distribution channel, while the OBPP will provide the technology and transaction infrastructure.
For an MFD, the proposed process can broadly be understood as:
MFD → NISM Fixed Income Certification → Stock Exchange Enlistment → OBPP Due Diligence → FICP
Once appointed by an OBPP, the FICP can help investors access and transact in eligible fixed-income products available on the platform.
Can MFDs sell corporate bonds?
Under the proposed SEBI framework, eligible MFDs could distribute corporate bonds and other permitted fixed-income securities through OBPPs.
This could be a significant opportunity for MFDs because they already have established relationships with investors and experience in explaining investment products.
The proposed framework aims to expand the distribution network for fixed-income products and improve retail investor participation in the corporate bond market.
For MFDs, this means they could potentially add corporate bonds and other fixed-income products to their existing product offering.
Why is SEBI proposing the FICP framework?
India’s corporate bond market has grown significantly over the years. However, retail participation in corporate bonds and other fixed-income securities remains relatively limited.
One of the key challenges is distribution. Online Bond Platform Providers have made it easier for investors to access bonds digitally, but many retail investors may still prefer dealing with a financial intermediary who can explain the product and help them understand the associated risks. This is where MFDs could play an important role.
MFDs already have a wide distribution network across India, including Tier 2, Tier 3 and smaller cities.
The proposed FICP framework could use this existing network to increase awareness and access to fixed-income investments.
How can an MFD become a Fixed Income Channel Partner?
An MFD interested in becoming an FICP will need to meet the eligibility and compliance requirements under the proposed framework.
The process can broadly involve the following steps.
1. Obtain the required NISM certification
The distributor will need to obtain the prescribed NISM-Series: Fixed Income Securities Certification.
This certification is intended to ensure that distributors have the necessary knowledge and understanding of fixed-income products.
Existing MFDs who meet the applicable requirements could use this certification as the first step towards entering the fixed-income distribution business.
2. Get enlisted with a recognised stock exchange
After completing the required certification, the applicant can apply for enlistment with a recognised stock exchange.
The exchange will verify the applicant’s eligibility and other applicable requirements.
Once the requirements are satisfied, the exchange can issue an FICP enlistment number.
The proposed enlistment would remain valid for three years, subject to continued compliance with the applicable requirements.
3. Partner with an Online Bond Platform Provider
After obtaining the required enlistment, the FICP can approach one or more Online Bond Platform Providers (OBPPs).
However, getting enlisted with a stock exchange does not automatically make an MFD an FICP of an OBPP.
The OBPP will conduct its own due diligence before appointing the distributor.
This means an MFD could potentially work with multiple OBPPs, subject to meeting the requirements of each platform.
4. Complete KYD, IPV and due diligence
The OBPP will conduct Know Your Distributor (KYD), In-Person Verification (IPV) and other due diligence before appointing the FICP.
The FICP and OBPP will then enter into an agreement covering responsibilities, confidentiality, commission sharing and other applicable terms.
How much commission can MFDs earn from corporate bonds?
The potential additional income is likely to be one of the biggest attractions of the proposed FICP framework for MFDs.
Under the proposed framework, the FICP will not directly charge the investor.
Instead, the OBPP can share brokerage, fees or other income earned from fixed-income transactions with the FICP.
The proposed maximum client fee, commission or brokerage is 2.5% of the investment value.
However, MFDs should not assume that they will automatically earn 2.5%.
The 2.5% figure represents the proposed maximum fee, commission or brokerage that can be charged to the client. The actual amount received by an FICP would depend on the commercial arrangement between the FICP and the OBPP.
Therefore, the proposed framework should be viewed as an additional revenue opportunity, rather than a guaranteed 2.5% commission.
What will an FICP do?
The FICP will essentially act as the distribution and investor-facing channel for fixed-income products.
An FICP can:
- Introduce investors to eligible fixed-income products.
- Explain the features and risks of fixed-income securities.
- Help investors understand available investment opportunities.
- Assist with investor onboarding.
- Facilitate KYC and documentation.
- Help investors complete transactions through the OBPP platform.
- Maintain relationships with investors.
- Provide distribution and investor support.
However, the FICP will not handle client funds or securities.
Transactions will be executed through the OBPP platform, which will also generate the relevant transaction documents.
What is an Online Bond Platform Provider?
An Online Bond Platform Provider (OBPP) is an online platform that enables investors to access information about eligible bonds and other permitted fixed-income securities and transact through the platform.
Under the proposed FICP framework, the responsibilities of the FICP and OBPP will be different.
The FICP will primarily focus on:
Distribution + Investor Relationship
The OBPP will primarily provide:
Technology + Transaction Infrastructure
This arrangement could allow MFDs to enter the bond distribution business without having to build their own technology platform.
Can an MFD work with multiple OBPPs?
Yes. Under the proposed framework, an FICP can potentially be appointed by one or more OBPPs, subject to the respective platform’s due-diligence and appointment requirements.
This could provide MFDs with flexibility to work with different platforms and offer investors access to a broader range of eligible fixed-income products.
However, distributors will need to evaluate the products, disclosures, risks and commercial arrangements carefully before recommending any investment.
SEBI has also proposed safeguards to ensure that financial incentives do not become the sole basis for recommending a particular fixed-income product or OBPP.
What are the benefits of the FICP framework for MFDs?
The proposed FICP framework could provide several benefits to Mutual Fund Distributors.
- Additional revenue opportunity- MFDs could potentially earn an additional income stream by distributing fixed-income products through OBPPs.
- Expand beyond mutual funds- The framework could allow distributors to expand their product basket and address a wider range of investor requirements.
- Leverage existing investor relationships- MFDs can potentially use their existing investor relationships to introduce suitable clients to fixed-income investments.
- No need to build a technology platform- The OBPP would provide the technology and transaction infrastructure, allowing MFDs to focus primarily on distribution and investor servicing.
- Opportunity in smaller cities- MFDs have a strong presence across Tier 2, Tier 3 and smaller cities. This could help bring fixed-income products to investors beyond major financial centres.
What should MFDs do now?
The FICP framework is currently a proposed regulatory framework and MFDs should wait for the final SEBI rules before beginning any distribution activity under the new structure.
However, distributors interested in the opportunity can start preparing by understanding the proposed requirements.
MFDs should keep an eye on:
- Final FICP eligibility criteria.
- NISM certification requirements.
- Stock exchange enlistment process.
- OBPP appointment requirements.
- KYD and IPV requirements.
- Commission-sharing arrangements.
- Permitted fixed-income products.
- Investor protection and disclosure requirements.
The final framework may differ from the current proposal, so MFDs should rely on the final SEBI regulations and applicable guidelines once notified.
FICP vs MFD: What is the difference?
The proposed FICP model is similar to the MFD model in terms of distribution, but the products and regulatory framework are different.
| MFD | FICP |
| Distributes mutual funds | Distributes permitted fixed-income securities |
| Works with AMCs and other distribution platforms | Works with Online Bond Platform Providers |
| Follows mutual fund distribution requirements | Follows proposed FICP requirements |
| Earns distribution commission from mutual fund transactions | Can receive income shared by an OBPP |
| Does not handle investor funds or securities | Will not handle client funds or securities |
For existing MFDs, the proposed FICP framework could therefore become a natural extension into fixed-income distribution.
What does the FICP framework mean for MFDs?
The proposed framework could create an opportunity for MFDs to diversify their business beyond mutual funds.
MFDs have played an important role in increasing mutual fund awareness and penetration across India. The proposed FICP framework could allow them to use the same distribution strength to increase awareness and access to corporate bonds and other fixed-income products.
For investors, the presence of a trusted distributor could make it easier to understand fixed-income products before investing.
For MFDs, it could mean: More products + deeper investor relationships + an additional revenue opportunity.
The ZLearn view
The proposed SEBI FICP framework could be an important development for the MFD community. The success of mutual funds in India has shown the importance of a strong distribution network in taking financial products to investors across the country.
If the proposed FICP framework is implemented, MFDs could play a similar role in expanding the reach of corporate bonds and other fixed-income securities.
The opportunity is not just about earning additional commission. It could also help MFDs become more comprehensive investment partners for their clients by offering access to a wider range of financial products. However, the FICP framework is currently at the proposal stage and the final regulations may change.
MFDs should therefore track the final SEBI guidelines before making business decisions based on the proposal. For MFDs looking to diversify their business in 2026, the proposed FICP framework is certainly a development worth watching.
Frequently Asked Questions
What is an FICP?
FICP stands for Fixed Income Channel Partner. Under SEBI’s proposed framework, eligible individuals and entities can act as distributors of permitted fixed-income securities through Online Bond Platform Providers.
Can MFDs distribute corporate bonds?
Under the proposed framework, eligible MFDs could become FICPs and distribute corporate bonds and other permitted fixed-income securities through OBPPs.
How much commission can MFDs earn from corporate bonds?
The proposed framework provides for a maximum client fee, commission or brokerage of 2.5% of the investment value. However, this does not mean that an MFD is guaranteed to receive 2.5%. The actual FICP payout will depend on the commercial arrangement with the OBPP.
What certification is required to become an FICP?
The proposed framework requires the prescribed NISM-Series: Fixed Income Securities Certification for eligible FICPs.
Can one FICP work with multiple OBPPs?
Yes. The proposed framework allows an FICP to be appointed by one or more OBPPs, subject to their respective due-diligence and appointment requirements.
Will FICPs handle investor money?
No. Under the proposed framework, FICPs will not handle client funds or securities. Transactions will be executed through the Online Bond Platform Provider.
Is the SEBI FICP framework final?
No. The FICP framework is currently a SEBI proposal/consultation framework. MFDs should refer to the final regulations and guidelines once they are formally notified.