How Retail Investors Can Buy Government Bond For ₹100

Investment portfolios of high net worth individuals (HNIs) tend to have large allocation to fixed income and debt as they look for stability, but retail investors usually don’t have much debt allocation, said Varun Sridhar, chief executive officer at Paytm Money.

- Jash Kriplani

In an interview, Sridhar said the company wants to make government bonds and other debt instruments more accessible to retail investors.

Paytm Money has launched bond investing platform for retail investors, wherein an investor can buy a government bond for as little as ₹100, along with tax-free and corporate bonds with a minimum investment of ₹1,000. Edited excerpts:

Why have you decided to offer bonds on your platform?

Several investors just want reasonable returns without very high risks. They want returns that are slightly higher than savings account and bank fixed deposits. They want capital protection with the ability to get some decent interest back. In capital markets, this can happen through fixed income instruments or bonds. Investors can choose from three types of bonds on our platform.

Government bonds have the least risk as these are issued by the government of India and come with a sovereign guarantee. So, investors can purchase a government bond on our platform, from two months tenure, all the way up to 39-year tenure. Then there are tax-free bonds from government-owned companies and corporate bonds.

If you look at investment portfolios of HNIs, they tend to have large allocation to fixed income and debt instruments to give overall stability to their investments, but retail investors usually don’t have much debt in their portfolio. We wanted to make government bonds and other debt instruments more accessible for retail investors.

Can lack of liquidity in bond markets throw up a challenge?

With government bonds, liquidity is not an issue. With corporate bonds, we have some restrictions where we don’t want to offer very illiquid bonds.