This significant change comes via a consultation paper released by SEBI on December 9, 2023, and aims to make these investment options more accessible to individual investors with smaller sums to invest. Previously, the high minimum investment amount often deterred individuals from participating in the NCD and NCRPS market, limiting their access to potentially lucrative fixed-income opportunities.
By lowering the minimum investment, SEBI hopes to achieve several goals:
- Increased Retail Participation: With lower investment thresholds, more individuals are likely to consider NCDs and NCRPS, broadening the investor base and fostering a more inclusive debt market.
- Enhanced Liquidity: A larger pool of investors could lead to improved liquidity for these instruments, making it easier for individuals to buy and sell their holdings when needed.
- Promoting Financial Inclusion: Lower entry barriers allow individuals with smaller savings to participate in the debt market, contributing to broader financial inclusion in India.
SEBI has invited public comments on this proposal until December 29, 2023. If approved, the new minimum investment amount is expected to come into effect in early 2024.
This move follows SEBI’s previous efforts to make the debt market more accessible to retail investors. In October 2022, the minimum investment for corporate bonds was reduced from Rs 10 lakh to Rs 1 lakh. Additionally, SEBI has supported the development of online bond platforms, further simplifying debt investment for individuals.
The proposed reduction in the minimum investment for NCDs and NCRPS is a positive step that could significantly boost retail participation in the debt market. This will not only benefit individual investors by providing them with access to new investment options but also contribute to the overall development and growth of the Indian financial system.