#SEBI's #Efforts to Make #Corporate #Bonds #Easier for Everyone to #Buy which will have more opportunities for Professionals like us a welcoming step towards #bond #market and #investors.
The Securities and Exchange Board of India is working hard to make it easier for people to invest in #corporatebonds, especially those who are not big financial institutions.
Here’s a simple write up on what they’ve done and why it matters:
#Changes in 2022:
In October 2022, SEBI made a big change. They lowered the minimum amount you need to invest in *privately placed corporate bonds from INR 10,00,000 to INR 1,00,000.This change was aimed at making it easier for smaller investors to participate in the market.
#ImpactofChanges:
As per the consultation paper Between July and September 2023, SEBI saw a positive impact from this change. Smaller investors, who usually invest less than #1%, suddenly contributed to #4% of the total funds raised. SEBI believed this increase was due to the lower investment amount and the use of online platforms that made buying bonds easier.
#New #welcoming #Changes on #3rd #July #2024
On July 3, 2024, SEBI made another important update, further reducing the minimum investment amount even further to INR 10,000 for privately placed bonds and non-convertible preference shares.
Here are the key points:
1. Lower Investment Amount: You can now invest in these bonds and shares with just INR 10,000 instead of INR 1,00,000.
2. #Conditions for Issuers
- Companies issuing these bonds must appoint at least one *Merchant Banker*
- The *bonds must pay regular interest or dividends and have a fixed maturity date*
3. #EnhancedSecurity
- SEBI allows different forms of security to make these bonds safer, like guaranteed bonds or bonds backed by other assets.
- Credit Rating Agencies must check and verify that these securities are safe and reliable.
4. Trading: The minimum trading amount for these bonds on the stock market will be equal to their face value.
#Why This Matters:This change is meant to help more people invest in corporate bonds, making the market more accessible and fair. By lowering the investment amount, SEBI hopes to attract more small investors, giving them the same opportunities as big financial institutions. This move also aims to increase transparency and trust in the market, making it safer for everyone to invest.
#Conclusion: SEBI’s changes are all about making the corporate bond market easier to access, simpler to understand, and fairer for everyone. By lowering the minimum investment amount, more people can participate, which helps create a more vibrant and inclusive market , as rightly explained by PS Rao sir, Sr. Partner of PS Rao Associates, on PCS Day Event at ICSI Hyderabad on new opportunities for PCS in Bond Market, with this move by SEBI companies also can raise Debt using the bond market ... Our role also will increase as a PCS . *Good luck to all* for vibrant Bond Market in coming days
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