SEBI Considers UPI App For Bond Investments
The Securities and Exchange Board of India logo. (Photo: BloombergQuint)

SEBI Considers UPI App For Bond Investments

Months after the market regulator allowed retail investors to subscribe to an initial public offer using the Unified Payment Interface, it plans to extend the facility for investing in the bond market.

The Securities and Exchange Board of India is working on a UPI app for bond subscriptions as part of the regulator’s strategy to encourage greater retail participation in bond markets, Chairman Ajay Tyagi said at the third Assocham Corporate Bond Market conference in Mumbai.

To improve transparency of corporate bond issuances, Tyagi said the regulator recently scrapped the 1 percent security deposit for public debt issues, reduced the time taken for listing bonds to 6 days from 12 and made subscription to public bonds compulsory through the Application Supported by Block Amount facility.

“I hope these measures will help reduce the cost of corporate bond issuances in India,” he said. Tyagi, however, didn’t provide any details when the guidelines on the UPI-facility for bond investments would be issued.

At present, retail investors can purchase corporate bonds and government securities directly through the stock exchanges or mutual fund houses. They can also indirectly invest in corporate bonds through insurance schemes, provident fund and pension funds.

As of June, there’s Rs 4.88 lakh crore worth of investments in liquid or money market funds, Rs 8,592 crore in gilt funds and more than Rs 6.57 lakh crore in debt-oriented funds, according to data available with the Association of Mutual Funds in India.

In November last year, SEBI had said it would launch UPI as an alternative payment option for retail investors buying shares in a public issue in a phased manner from Jan. 1, 2019. It later extended the deadline till July 1. The move was aimed at lowering listing time and increasing the efficiency of the existing system and curb the need for manual intervention.

While the equity market garnered attention from retail investors, a few public non-convertible debenture issued by several non-bank lenders in recent weeks, too, have seen considerable retail participation.

Tata Capital Financial Services Ltd. issued NCDs worth Rs 500 crore, for which it had reserved Rs 175 crore for retail investors. But the issue was oversubscribed more than fivefold, according to BSE data. IIFL Ltd. had reserved Rs 40 crore for its Rs 100-crore NCD. This, too, got oversubscribed by Rs 163 crore.

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