Bonds are great alternative to FDs, debt funds- Paytm Money CEO Varun Sridhar

Bonds are great alternative to FDs, debt funds: Paytm Money CEO Varun Sridhar

Paytm Money, which launched its bonds platform last month, is very optimistic about the future of the retail bond market in India.

The company’s top management believes that bonds should have a portfolio weight of 30-40%. Currently, 100 million Indians should have direct bonds in their portfolios.

Sridhar further said that their research has shown around 70% of Indians are savings in mutual funds, fixed deposits or in savings accounts. On the platforms of Paytm Money, there is a trend of users adding money but not trading that regularly. Paytm Money decided to introduce bonds for retail investment, which earlier was limited for institutions or high networth individuals.”

He added that Gujarat is an important market for the company because it is among top three regions. Gujarat has highest participation of exchange traded funds (around 25%), 10% of total monthly active users in equity are from Gujarat, 10% of our monthly/yearly transactions come from Gujarat, contributes 10% of total MF business, ~600 crore of MF assets under management ( 7% of total) are from the state and it has highest participation in IPO ( ~40% users dealing in IPOs).

Commenting on the attractiveness of bonds, Sridhar said these can diversify the portfolio of the investors, reduce overall volatility and provide a hedge against market downturns.

Moreover, recent changes to the taxation of debt mutual funds also made bonds more attractive, as for bonds, interest income and short term capital gains (?1 year) is taxed at the investors’ marginal tax rate and long-term capital gains (?1 year) is taxed at 10% without indexation. Further, bonds do not attract any STT or stamp duty which reduces the transaction cost.”

“With this platform, Paytm Money is trying to help retail investors in accessing the bond market easily and safely. We provide a comprehensive collection of publicly listed bonds with ticket size more appropriate for retail investors. The platform also provides necessary information about the bonds including issuer details, current yields, maturity dates, credit ratings and other relevant data”, added Sridhar.