You have recently launched a bond investing platform tailored for retail investors. Can you please provide an update on the traction and progress you have seen so far?
Varun Sridhar: We launched the bonds platform on Paytm Money through an early access program, and the response from users has been phenomenal. More than 85,000 people applied to join the waitlist for a chance to experience the app, and now, the app is available to all Paytm Money customers.
Since the launch, we have witnessed approximately 65,000 unique users accessing the application, with an average usage time of nearly 10 minutes per session. This level of engagement reflects the strong interest and satisfaction among customers.
Which category of products are seeing the maximum demand and why?
Varun Sridhar: Customers have demonstrated great enthusiasm for purchasing various types of bonds, including government bonds, corporate bonds, and tax-free bonds, spanning across different tenures ranging from a few days to 39 years. The investment amounts have been diverse, ranging from Rs. 100 to several lakhs, accommodating investors of all levels.Government Bonds, offering a yield of approximately 7.2%, have been particularly popular among customers in recent days. These bonds come with an absolute sovereign guarantee, the flexibility to sell without any premature penalties, and the option to invest for long terms, up to 39 years. They have proven to be an excellent alternative to fixed deposits, as investors can secure favourable rates for extended periods and even capitalise on capital gains if interest rates decrease.Corporate bonds issued by esteemed companies like Tata Capital, IndiaBulls Housing Finance, and PFC have also garnered significant attention from our customers. These bonds offer yields ranging from 8% to 14%, providing a wide range of options that align precisely with investors’ risk profiles.
An important issue has been the removal of LTCG tax benefit on debt mutual funds. How has that changed the scenario?
With the recent changes in the taxation of Debt Mutual Funds, direct investment in bonds has emerged as a compelling alternative to both fixed deposits and debt mutual funds. It’s important to note that for bonds, interest income and short-term capital gains (less than 1 year) are taxed at the investors’ marginal tax rate. Long-term capital gains (over 1 year) are taxed at a rate of 10% without indexation. Additionally, transactions involving bonds do not incur Securities Transaction Tax (STT) or stamp duty, resulting in reduced transaction costs for investors.
Experts including past SEBI bosses have said there is a need to deepen India’s bond markets and retail investors lag in this market. What is your take on this and is retail participation in India enough?
Fixed income is an essential component of every investor’s portfolio, and bonds serve a crucial role in meeting that requirement. Institutional investors dominate the bond markets globally, including India, owing to various factors such as limited investor education, high ticket sizes, accessibility challenges, and the absence of retail investor-friendly platforms, among others.
Our objective is to enable 100 million Indians to directly include bonds in their portfolios. Bonds offer an excellent starting point for many investors, providing alternatives to debt mutual funds, fixed deposits, and goal-based investing with capital protection, including corporate bonds, tax-free bonds, and government bonds.
Given that bond investment is not something easily discussed or availed by retailers as compared to stocks for example, what can your platform do to get more retail investors interested?
Paytm Money provides retail investors with wide access to various categories of bonds. Whether it’s government securities, corporate bonds, tax-free bonds, or other types, the platform offers a comprehensive range of options. This allows investors to assess their risk appetite, investment objectives, and financial goals, enabling them to select the bond category that aligns with their comfort level and investment preferences.
Multiple brokers and retailers contribute to the bond offerings on the platform, resulting in an extensive selection for retail investors.
One significant advantage is that all publicly listed bonds are available for retail investors to view. These bonds have been listed on exchanges through public issues, rather than private placements, making their ticket sizes more suitable for retail investors.
Paytm Money’s bond offerings function as a marketplace rather than a counterparty.
What is the due diligence that you need to adapt for saving customers’ data amid reports of an increased data breach in several investment and lending apps?
Paytm Money has always prioritized data privacy and IT security. We have diligently implemented the most stringent standards across all our platforms and products. As a responsible entity, we strictly adhere to SEBI regulations and have gone above and beyond to fortify user safety, making fraud and unauthorized access extremely challenging.
We recognize the significance of ensuring retail investor safety, particularly given the current stage of retail participation in bond markets. Any adverse event or misleading practices could severely dent investor confidence and hinder efforts to deepen bond markets. Therefore, we have developed our platform with transparency and investor safety as the fundamental principles.
