New Delhi, Oct. 18 -- The Securities and Exchange Board of India (Sebi) has introduced a three-day liquidity window facility to encourage retail participation in the corporate bond market.

In a 16 October circular, the market regulator said it would allow bond issuers to give investors voluntary put options to sell bonds back at specific intervals before maturity.

A put option will give investors the right but not the obligation to sell the bond back to the issuer during the liquidity window.

According to Sebi, India's corporate bond market is perceived to be illiquid due to low levels of secondary market transactions, as large institutional investors hold them to maturity.

The liquidity window, it said, would help change that percept...