The meter translates credit ratings into six colour-coded risk categories, ranging from Irish Green for AAA-rated instruments, indicating the lowest credit risk, to red for securities rated B, C or D, signalling high to very high risk of default. The regulator has also specified colour codes to ensure consistency across platforms.
Digital access rises, but distribution remains a challenge
The move comes as the regulator seeks to deepen retail participation in the corporate bond market. Online platforms and the reduction in the face value of certain privately placed debt securities to ₹10,000 have lowered entry barriers. Retail activity has also increased, with request-for-quote (RFQ) trades rising more than six-fold in FY26, according to Nishchay Nath, founder and CEO of BondScanner.
“Access is no longer the main barrier as online bond platforms and SEBI’s cut in face value to ₹10,000 have helped drive a surge in retail activity,” Nath said. “What bonds still lack is distribution and familiarity. Mutual funds became household products because trusted intermediaries sat across the table in smaller towns, explaining it to them.”
Nath said SEBI’s proposed Fixed Income Channel Partner framework could help extend bond distribution into Tier-II and Tier-III markets, drawing parallels with the role intermediaries played in popularising mutual funds.
Risk disclosures must keep pace with wider access
SEBI’s new framework requires the meter to reflect the lowest rating when a security has ratings from multiple agencies. For unsecured bonds, the word “unsecured” must appear below the meter in bold red text. Additional Tier-1 (AT1) bonds must also carry a warning about the risk of losing the entire invested capital.
The regulator has clarified that the meter captures credit risk alone and does not reflect market or liquidity risks. Online bond platforms must update the meter within 24 hours of receiving rating-change alerts from depositories.
Can bonds become a mainstream investment?
For bonds to become as familiar as mutual funds or fixed deposits, visual disclosures will need to be complemented by investor education and responsible distribution. A colour-coded rating can simplify information, but it cannot eliminate default risk or guarantee returns.
The larger challenge, therefore, is to make bonds easier to understand and access without allowing convenience to overshadow the risks investors take.