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Buying bonds from fintech platforms? Convenience might come at cost of safety

Fintech platforms distributing bonds are not regulated. This means there are no standardised disclosures or settlement or redressal systems.

August 04, 2022 / 07:37 AM IST

Over the past 1.5 years, I have received many queries about direct bond investments available on bond platforms. Given the attractive yields of 9.5 percent to 12 percent per annum, there is rising interest in these bonds.

Most of these bonds are non-convertible debentures issued by non-banking finance companies. Some bonds are secured by collateral and covered bonds come with an extra cover pool that can be utilised in case of default.

Investors are flocking to these bonds, believing them to be a superior alternative to bank fixed deposits. But do they really understand what they’re getting into?

What investors get