'Bonds and maybe not stocks are the right stepping stone for most Indians..': Nithin Kamath hails key changes in bonds market made by SEBI

Nithin Kamath calls bonds as a good stepping stone for Indians than stocks and FDs.

New Delhi: Zerodha co-founder Nithin Kamath has hailed the new changes in the bonds market by Securities exchange board of India (SEBI) as he has called Bonds a better stepping stone for most Indians than stocks and FDs. SEBI in its Mondy circular informed to allow bonds less than 1 lakh can also be settled through several payment methods apart from RTGS.

Kamath pointed out some big issues for the bonds market till now. First, there was lack of availability of bonds with small face values. He emphasised that most bonds so far issued through private placements and had face values of Rs 10 lakh+. Therefore, retails investors were priced out.

Second problem, Kamath pointed out, was all bonds deals had to be settled through the clearing corporations and they only accpeted RTGS as a payment mode. Hence, the minimum transactions size became Rs 2 lakh+ by default.

Nithin Kamath praised the key changes made by SEBI in recent times in his linkedin post. Some of the measures, he pointed out, were reducing the face value of privately placed bonds to Rs 1 lakh, allowing brokers to participate on Request for Quote Platform (RFQ) on behalf of investors and allowing alternate payment modes apart from RTGS.

Kamath believed those measures would go a long way toward making it easier for retail investors to invest in corporate bonds. He further said that as retail demand increased, we should hopefully see more bond issues with smaller face values.