Good news for fixed-income investors! Now you can buy bonds for just Rs 10,000
In one of the biggest reforms for the bonds market in India, capital market regulator SEBI has given its go-ahead to a proposal to cut the minimum ticket size of bond investments to Rs 10,000 from Rs 1 lakh.
The move will boost retail participation in the Indian bond market as so far 99% of the bonds had a minimum ticket size of Rs 1 lakh. The ticket size of Rs 1 lakh made this asset class out of reach for most of the investors.
In its board meeting on Tuesday, the Securities and Exchange Board of India (SEBI) approved this proposal to reduce the ticket size for bond investments to only Rs 10,000, marking a significant milestone in mainstreaming investments into this asset class.
“To enhance participation of non-institutional investors in the bond market while safeguarding the interest of such investors, the board approved the proposal to provide an option to the issuers to issue NCDs or NCRPS through private placement mode at a reduced face value of Rs 10,000 along with the requirement to appoint a merchant banker. Such NCDs and NCRPS shall be plain vanilla, interest/dividend bearing instruments. However, credit enhancements shall be permitted in such instruments,” the regulator said in a release post board meeting.
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On SEBI’s move, Vishal Goenka, Co-Founder of IndiaBonds.com, said, the regulator’s board has approved “reduction in face value of private placed debt to Rs 10,000 from current Rs 1 lakh, subject to appointment of merchant banker. As more than 90% of issued corporate debt is privately placed, this will accelerate the retailisation of the corporate bond markets due to reduction in investment minimum size”.
In the board
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