In an effort to increase retail investor participation in the debt market, the Securities & Exchange Board of India (SEBI) has reduced the face value of corporate bonds from Rs 1 lakh to ₹10,000. This move has been praised by Zerodha co-founder Nithin Kamath, who believes it will make bonds more accessible to small investors. Additionally, Sebi has announced further changes in rules for mutual funds, including the option for joint holders to nominate their fund account and allowing a single fund manager to oversee both commodities and foreign investments. These measures are aimed at promoting ease of doing business and curbing fraudulent trades.
SEBI's Initiatives to Enhance Retail Investor Participation in Debt Market and Streamline Mutual Fund Operations
The Securities and Exchange Board of India (SEBI) has implemented several significant changes to promote retail investor participation in the debt market and streamline mutual fund operations. These measures aim to enhance accessibility, transparency, and ease of doing business within the financial sector.
Reduction of Corporate Bond Face Value
Previously, corporate bonds had a face value of Rs 1 lakh, making them inaccessible to many retail investors. However, SEBI has now reduced the face value to ₹10,000, making them more affordable and appealing to a wider pool of investors. This move is expected to increase participation from individuals and households, broadening the investor base in the debt market.
Praise from Zerodha Co-founder
Nithin Kamath, co-founder of Zerodha, one of India's leading online brokerages, has praised SEBI's decision. He believes it will make bonds more accessible to small investors and encourage long-term wealth creation. He also expressed optimism that these changes will deepen the bond market and contribute to India's financial inclusion efforts.
Other SEBI Initiatives
In addition to reducing the face value of corporate bonds, SEBI has also announced the following changes:
Top 5 FAQs and Answers
Q1: Why did SEBI reduce the face value of corporate bonds? A: To make them more accessible to retail investors and increase participation in the debt market.
Q2: What is the new face value of corporate bonds? A: ₹10,000
Q3: What is the benefit of joint account nomination in mutual funds? A: It ensures smooth transfer of funds to the designated nominee in the event of the joint account holder's demise.
Q4: Can a single fund manager now manage both commodities and foreign investments? A: Yes, under SEBI's new regulations.
Q5: What measures has SEBI taken to curb fraudulent trades? A: Increased due diligence, enhanced reporting requirements, and new regulations aimed at preventing market manipulation.
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