India’s fixed income market is gradually opening up to retail investors, with industry experts saying the asset class is often perceived as complex even though its risks are relatively straightforward.
Speaking at Moneycontrol FiDEX 2026 (Financial Distribution Expo), Prateek Goyal, Chief Strategy Officer at Jiraaf, Yagnesh Upadhyay, Executive Director at The Fixed Income, and Anand Sonawane, Director at IndiaBonds, said increasing awareness, regulatory support and digitisation are helping bring bonds and fixed income instruments closer to retail investors.
Fixed income simpler than equities
Prateek Goyal said fixed income investing is often easier to analyse compared to equities because investors primarily focus on credit risk rather than multiple business variables. “In equity, you are doing fundamental research on a company and taking a long-term call whether the company will do well or not. That includes a lot of risks including execution risk,” he said.
By contrast, bond investing requires evaluating the issuer’s creditworthiness over a defined period. “In fixed income, you are essentially measuring only one thing which is credit risk. If you are not doing long-tenured bonds, then you are looking at credit risk in a short time window where adequate financial information is available,” Goyal said.
He added that credit rating agencies and market analysis provide additional support for investors evaluating bonds. “It is just a little bit unknown at the moment. As it gains more popularity, people will find it much easier,” he said.
Awareness gap driving perception of complexity
Yagnesh Upadhyay said the complexity often associated with bonds largely stems from lack of awareness rather than the structure of the asset class. “Essentially today it is the awareness that is making it more complex than the asset class itself,” he said.
He explained that for investors who hold bonds until maturity, the main risk to evaluate is credit risk. “Apart from credit risk, as long as you are holding the bond till maturity there is not much risk involved,” Upadhyay said.
He added that liquidity risk exists when investors want to exit before maturity, but improvements in market infrastructure are gradually addressing this challenge. “Many online bond platforms are pushing liquidity and SEBI is also pushing the bond market to evolve,” he said.
Digital platforms improving access
Anand Sonawane said online bond platforms have significantly simplified the investment process for retail investors. “As a retail investor, you can log into an online platform, complete your KYC digitally, select the bond, make the payment through UPI or payment gateway and receive the bond in your demat account,” he said.
According to him, digitisation has reduced the operational complexity of bond investing. “Earlier the complexity existed because there was very little awareness about the bond market. Now many online platforms transparently showcase the yield available on bonds and provide an end-to-end digital journey,” Sonawane said.
However, he noted that fixed income still receives less attention compared to equities. “Fixed income is the least talked asset class. Predominantly we talk about equity and somehow fixed income is missed out,” he said.
Credit risk remains the key consideration
The panelists also cautioned that fixed income investments are not risk-free and require careful credit evaluation. Sonawane said investors sometimes chase higher returns without fully understanding the underlying risk.
“There is a perception that bonds are risk-free, but that is not correct. We have seen defaults in the past,” he said. He warned that losses in bonds can be severe if credit risk is not assessed properly.
“In equity if you go wrong your Rs 100 may become Rs 70 or Rs 80, but in bonds if you go wrong your Rs 100 can become zero,” Sonawane said. He added that investors should examine issuer background, credit ratings and whether the bond is secured before investing.
Digitisation and regulation driving growth
Experts said regulatory initiatives and technological developments have played a major role in expanding retail participation in the bond market. Goyal said the number of issuers tapping the debt market has increased significantly.
“Earlier it was largely PSUs and state governments accessing capital markets. Now A-rated and even BBB-rated companies are coming to the markets,” he said. He also highlighted the role of regulators in strengthening the ecosystem.
“The push from regulators through online bond platforms and initiatives to strengthen debt capital markets has been a big tailwind,” Goyal said. Upadhyay noted that regulatory changes have also lowered entry barriers for retail investors.
“Five years ago you required around Rs 10 lakh to invest in bonds. Now you can start with about Rs 1,000 on online platforms,” he said.
Fixed income allocation gaining traction
The panelists said fixed income allocation is gaining importance as investors look to balance wealth creation with capital preservation. Goyal said around 30 percent of his personal portfolio is allocated to fixed income, mainly in short-term bonds.
Upadhyay said about 40 percent of his portfolio is invested in bonds and fixed deposits combined. Sonawane added that investors should decide allocation based on their financial goals.
“There is no defined ratio. Investors should decide how much capital they want to preserve and how much they want to allocate for wealth creation,” he said.
According to the panelists, growing awareness, improved market infrastructure and easier access through digital platforms are likely to expand retail participation in India’s bond market in the coming years.
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