In a major reform, the Securities and Exchange Board of India (SEBI) has cut down the minimum investment amount for bonds from ₹1 lakh to ₹10,000. This move from SEBI will significantly boost the participation from retail investors as bonds are generally considered better than FDs and consists less risk than stocks.
Why This Matters
Earlier, most of the retail investor were not able to purchase the bonds due to their high minimum investment requirement of ₹1 lakh. Due to this small investors were barred from a profitable investment option that could lead in a good diversification for their portfolios. Now, with the SEBI’s approval bonds are now accessible to a wider range of investors because of reduction in face value to ₹10,000.
How it Works
Now, companies can choose to issue ₹10,000 non-convertible redeemable preference shares (NCRPS) and non-convertible debentures (NCDs). To safeguard investors, these securities will be sold through private placement, mandating the engagement of a merchant banker. These will be simple investments that pay dividends or interest, with the possibility of credit upgrades to better protect investors.
Nithin Kamath Appreciates SEBI
Zerodha founder and CEO, Nithin Kamath also expressed his appreciation for SEBI and happiness for the retail investors by sharing a message on X. He said “Companies can now issue bonds with face value of Rs.10,000. This is a great move that can help attract retail participation in the bonds. With all the changes in the last few years, SEBI has done an amazing job of making bonds accessible to small investors.”
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