Will investing in bonds be made easier in India?
₹10,000. Sebi also came out with a regulatory framework for online bond platforms and guidelines to cut the minimum face value of corporate bonds to ₹1 lakh. But these measures would still be counted as piecemeal approach.
One of the ways to make it work is by acting in a holistic manner —addressing most of the underlying root causes of poor bond market dynamics in India. And, this would not be very hard if there is consensus among all stakeholders including regulators. The comfort of deposits is a result of ease of transaction and low minimum amount.
Currently, bonds have a starting face value denomination of ₹1,000. Regulators should attempt to bring down face value of every fixed income bond to ₹100. The next step would be to do away with multiple accounts and module registrations.
Regulators should work to migrate to single issuance mode, preferably demat. India has one of the best market infrastructure that has been already tested and used extensively—a combination of trading, demat and bank accounts. These, along with a facility like ASBA (applications supported by blocked amount) can be used very efficiently to create ease of access.
Another step is to increase awareness among investors and improve transparency. Exchanges and online bond platforms should be directed to show clear information including rating, type, price/ yield linkage, interest inbuilt but not paid, simple calculator to arrive at settlement amount at a particular price or yield. Also, the price and trade history of bonds should be made easy with the option of filtering the historical market data as per different variables like bond type, issuer, ISIN (International Securities Identification Number) etc.
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