Online bond platform providers have started offering fixed deposits to investors, eyeing a pie of the distribution income from a lucrative segment of the market.
Wint Wealth and GoldenPi are selling corporate FDs on their website or through other website links. BondsIndia showcases FD products and their returns.
“We will earn 50-100 basis points (bps) distribution commission from NBFCs and small finance banks. Being a mass product, we can build a sustainable revenue stream from FD distribution,” said Ajinkya Kulkarni, co-founder of Wint Wealth.
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.
Fixed deposits have become attractive investment options after the Reserve Bank of India increased interest rates by 250 basis points since May 2022 to curb inflationary pressures. The repo rate, at which the RBI lends funds to banks, currently stands at 6.50 percent.
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Going by the trend of returns on FDs, a Moneycontrol analysis showed that non-banking finance companies offer slightly higher interest rates than their banking peers. According to the websites of state-owned and private banks, FDs offer interest in the range of 3 percent to 7.9 percent across tenures. NBFCs offer returns in the range of 7.3 percent to 8.5 percent across tenures.
GoldenPi and Wint Wealth both offer Bajaj Finance’s FD on their platforms, according to their websites. Kulkarni of Wint Wealth told Moneycontrol the company plans to start offering Fincare Small Finance Bank’s FDs next week.
Bond platforms typically offer only bonds that are listed, SDI (securitised debt instruments) and other products, as directed by the Securities and Exchange Board of India.
Regulatory aspects
According to Sonam Chandwani, managing partner at KS Legal & Associates, online bond platforms selling FDs must adhere to the regulatory framework set by the Reserve Bank of India, which primarily oversees FDs, while SEBI governs securities.
If platforms offer securities and FDs, they fall under the purview of both regulatory bodies, creating potential complexities. She said SEBI, in collaboration with the RBI, might need to provide clear directives for such platforms to ensure consistent compliance across all financial products.
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“This would help in maintaining transparency, investor protection, and the integrity of the financial marketplace,” she said.
As per SEBI’s guidelines, online bond platform providers can offer the following: listed debt securities, listed municipal debt securities and listed securitised debt instruments; debt securities, municipal debt securities and securitised debt instruments proposed to be listed through a public offering; listed government securities, state development loans and treasury bills; and listed sovereign gold bonds.
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