MC Interview | Government-guaranteed, high-yielding bonds are on our radar, says The Fixed Income’s Tirth Shah

Tirth Shah

Thefixedincome.com, an online bond platform, plans to target sales of government-guaranteed bonds, municipal bonds and high-yielding bonds in coming days, said its co-founder Tirth Shah in an interview with Moneycontrol on June 28.

Currently, the company offers securities including sovereign bonds (Gsec), state development loans (SDLs), Treasury Bills (T-bills), PSUs bonds and Sovereign Gold Bonds (SGBs), Shah said.

In the last three years, the number of retail investors and value of investments made through online bond platforms have increased by over 100 percent, data compiled from various bond platforms showed.

Online bond platforms are companies that have websites or mobile applications to sell bonds or non-convertible debentures to investors, especially retail.

Shah also spoke about the revised framework by the Securities and Exchange Board of India (SEBI) for online bond platforms and forming an association for these entities. Edited excerpts.

How much growth your bond platform has witnessed in terms of the number of investors and investments?

The bond market is predominately considered as the institutional market and retail had an almost negligible share in it. However, in recent times we have seen significant participation from the individual investors and numbers alone should not be the only criterion to judge the growth of the retail bond market.

We strongly believe that spreading market awareness and educating investors should be the priority for all of us, and once we meet the target the retail bond market can achieve extraordinary and exponential growth. We are working on different means to spread awareness and for it, we started BondGuru, our dedicated platform for creating bond awareness. And at the same time, we started conducting a series of investor awareness programmes with the help of the stock exchanges.

Since inception, we have witnessed more than 300 percent growth in retail investors on a year-on-year basis. The investment numbers have seen a similar level of growth of more than 300 percent growth.

How much investment do you see on your platform by the end of this financial year and what could be the number of investors?

Our first target is to spread awareness and educate investors about the bond market. Yes, we believe the investor base and investment value are very important for the growth of the platform. However, as of now we don’t want to put and target numbers for investors/investment base as we strongly believe that once enough awareness is spread then any number can be achieved. And that should be the common target/goal of all the online bond platform providers (OBPP).

Which bonds are you currently offering on your platform, and which ones are you planning to offer in the coming days?

Currently, we offer more than 200 varieties of bonds on our platform on any given day. These bonds are spread across the categories like Gsecs, SDLs, T-bills, government-guaranteed bonds, PSUs bonds, high-yielding bonds issued by marquee NBFCs, municipal bonds, bond/NCD public issues and SGBs. The idea is to add more variety without increasing the investment risk profile of the investors. And for the same, we make all necessary information like cash flows, term sheets, ratings, rating ratios and information memorandums available to investors on our platform so that they can take more informed decisions.

We are targeting more government-guaranteed bonds, municipal bonds and high-yielding bonds in the coming days.

Recently, the SEBI has amended the framework for online bond platforms after some platforms were selling unlisted bonds, how do you see the move by the regulator?

This was a very necessary step and we applaud the SEBI move. As you are also aware that the retail bond market is still at a very nascent stage and we definitely want investors to have confidence in the offerings of OBPPs and that can be achieved if we have standard regulations.

The rationale behind the whole OBPP guidelines is to establish a standard bond platform structure for the entire market and the SEBI has been very successfully implementing the same, that too without disturbing the existing market practice much.

For a listing of the bond, the SEBI has laid down the regulation and each entity desirous of listing their bond has to follow the regulations along with all due diligence and disclosures. Investors are also comfortable investing in listed bonds as they get all the necessary information/disclosures on the exchange websites. We believe it will benefit the entire investor fraternity when all SEBI-regulated platforms offer similar products and avoid any arbitrage on product offerings.

Do you feel more clarity is required on the online bond platforms framework? If yes, then what could be your suggestions that will help this newly grown industry to sail better?

We have been discussing the framework with the regulators and other OBPPs since the issuance of the consultation paper. The idea is to create a framework which will help the retail bond market to grow at an even faster pace and set fair standard practices in the market. The SEBI has been doing this extremely successfully and all our suggestions/comments are discussed, debated and then getting implemented. The SEBI has been very positive in taking feedback from all market participants and investors and taking effective steps to grow the retail bond market. Because of the representation from all OBPPs, SEBI has recently permitted OBPPs to offer Gsec and SGBs on their platforms.

Can you throw some light on the association of bond platforms? We have heard you are also part of it, what is the progress on that front?

For any industry to grow the association of core market participants is necessary to work closely with the regulators for constant development /enhancement in the regulation/framework.