The Securities and Exchange Board of India (Sebi) is examining a proposal to introduce a specialised category of distributors to expand the reach of debt products, Whole Time Member Amarjeet Singh said on Wednesday.
“We are now looking at how to replicate the successful model of mutual fund distribution in other parts of the financial system,” Singh said at the FICCI Financial Products Distribution Summit, adding that one area it has recently picked up is debt products.
Sebi is exploring how to use the specialised category of distributors to expand the investor base and promote retailisation of bonds. “Much like mutual fund distributors, it is envisaged they will simplify the investment process for retail investors by assisting with KYC formalities, documentation and initiating transactions.”
Highlighting the responsibility of distributors to educate investors about complex products, Singh said investors often grasp the upside narrative far better than the downside. “This makes the role of distributors critical in helping investors understand risk, navigate uncertainty, maintain discipline and make decisions aligned with their long-term financial goals.”
He cautioned against risks from social media and mis-selling. Market participation should be driven by informed decision making and long-term planning, and not by social media trends, Singh said. “Excessive focus on short-term performance, rapid customer acquisition or distribution volumes can actually create risks of mis-selling, unsuitable recommendations or production.”
According to the Sebi official, intense competition and asset growth pressures have intensified and acquiring customers has become more pronounced even as regulatory expectations have strengthened over the years. “The environment can sometimes tempt firms to prioritise growth over suitability, and short-term acquisition over long-term investor output. However, growth not built on investor trust will ultimately become difficult to sustain. Ethical distribution is, therefore, essential.”