Zerodha Co-founder Nithin Kamath Applauds SEBI’s Move to Boost Retail Participation in Bond Market

Zerodha‘s Co-founder, Nithin Kamath, has expressed admiration for the recent decision by the Securities & Exchange Board of India (SEBI) to reduce the face value of corporate bonds, making them more accessible to retail investors.

Recognizing the significance of this move, Kamath highlighted that bonds can be a lucrative financial instrument for most Indians, offering better returns than fixed deposits and lower risk than stocks.

SEBI announced the reduction of the face value of corporate bonds from ₹1 lakh to ₹10,000, a change aimed at increasing retail participation in the debt market.

In a post on X, Kamath commended SEBI for its efforts in making bonds more attainable for small investors, overcoming previous hurdles that limited retail investors’ access to these financial products.

Kamath had previously raised concerns about the lack of bonds available to retail investors due to the high face values, often set at ₹10 lakh and above, which priced out many from participating.

SEBI’s recent measures not only lowered the denomination but also standardized record dates for identifying eligible holders, harmonized due diligence certificate formats provided by debenture trustees, and offered flexibility in publishing financial results for entities solely listing non-convertible securities.

The SEBI board approved an option for issuers to issue Non-Convertible Debentures (NCDs) or Non-Convertible Redeemable Preference Shares (NCRPS) through private placement with a reduced face value of ₹10,000, requiring the appointment of a merchant banker in the process.

Additionally, the record dates for interest and principal payments of debt securities or NCRPS were decided to be set 15 days before their payment due dates, ensuring consistency in market practices among issuers.

These changes aim to democratize the bond market, opening new opportunities for retail investors and promoting financial inclusion in the country.

(With inputs from PTI)