MC Exclusive | Online bond platforms to register new industry body soon

Bonds

The online bond platform providers (OBPP) association has submitted its application for incorporation to the Registrar of Companies (RoC), which falls under the Ministry of Corporate Affairs, sources close to the development told Moneycontrol on November 1.

“We have submitted our application to the registrar, and it is likely to get completed in the next 15-20 days,” a source said on condition of anonymity.

In June, Moneycontrol reported, citing sources, that a clutch of online bond platforms in India will likely form an industry association in the next three to four months.

Around 16–18 members, or bond portals, are part of this association. This includes IndiaBonds, GoldenPi, The Fixed Income, Wint Wealth, BondsKart, BondsIndia, Bond Bazar, Grip Invest, and Yubi Invest, among others.

The sources added that the name suggested for the association is ‘OBPP Association’, which has been sent to the RoC.

Online bond platforms are companies that sell bonds or non-convertible debentures (NCDs) to investors, especially retail investors, through their websites or mobile applications (apps).

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The sources said that this association will be a single point of contact for the Securities and Exchange Board of India (SEBI) and other relevant stakeholders on issues pertaining to the industry.

The latest development is not surprising given that online bond platforms were brought under SEBI’s regulatory purview last year. The securities markets regulator released its ‘Registration and Regulatory Framework for Online Bond Platform Providers (OBPP)’ in November 2022.

As noted by the regulator, given the significant increase in the number of people transacting on online bond platforms, it was time they were brought under a regulatory framework.

This was later amended after some misselling happened on some platforms.

Business diversification

Recently, some OBPPs have started offering fixed deposits (FDs) to investors, eyeing a piece of the distribution income from a lucrative segment of the market.

Wint Wealth and GoldenPi are selling corporate FDs on their websites or through other website links. BondsIndia showcases FD products and their returns.

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Experts said most investors prefer FDs as their first option while planning their finances. This could be due to the safety of the product and the fixed returns they offer, the experts said. In other fixed-income securities with high returns, the risk of volatility remains, they said.

FDs have become attractive investment options after the Reserve Bank of India (RBI) increased interest rates by 250 basis points (bps) since May 2022 to curb inflationary pressures. The repo rate, at which the RBI lends funds to banks, currently stands at 6.50 percent.