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Retail Investors Flock to Bonds After Sebi Lowers Entry Barrier
29 Mar
Summary
- Sebi reduced the minimum investment in corporate bonds to ₹10,000.
- Retail investor participation in bonds has surged significantly.
- Annual retail investment in bonds now reaches approximately $3 billion.
In June 2024, the Securities and Exchange Board of India (Sebi) enacted a significant policy change, reducing the minimum investment threshold for corporate bonds from ₹1 lakh to ₹10,000. This move has markedly increased accessibility for retail investors.
Market participants have observed a substantial surge in retail participation following this regulatory adjustment. Nikhil Aggarwal of Grip Invest highlighted that approximately $3 billion annually is now flowing from retail investors into bonds, with the sector experiencing an annual growth rate of around 300%.
The average bond investment size has consequently fallen to ₹50,000-60,000, with platforms like Grip Invest seeing a significant portion of their user base originating from beyond major metropolitan areas.
Historically, retail participation in the bond market was below 2% as of FY22, a trend observed globally. Developed markets like China and the US facilitate easier retail access through various online platforms, ETFs, and simplified channels, as noted in a December report by Niti Ayog.
Industry experts suggest that further deepening of retail participation could be achieved if wealth managers and mutual fund distributors begin offering a wider array of bonds to their clients. A Deloitte report from January 2025 projects that the wealth of affluent households will rise to $2.3 trillion by FY29, presenting considerable opportunities in the sector.
