Zerodha, Angel One Approved To Offer Corporate Bonds

Zerodha and Angel One, two large brokerage firms, have received approval from the Securities and Exchange Board of India (SEBI) to introduce corporate bonds on their investment platforms. This move signals growing competition in India’s retail fixed-income market.

According to reports, both brokers are currently testing their bond offerings and related features internally. They are expected to make the products available to customers over the next few months. Another brokerage firm, Dhan, is also reportedly preparing to introduce corporate bonds on its platform.

Groww, India’s largest brokerage by active investors, has already entered the corporate bond market in May. The platform is currently facilitating bond sales worth nearly ₹200 crore every month. The online bond platform ecosystem operates under SEBI’s Online Bond Platform Provider framework, which has seen nearly 40 entities secure regulatory approval to operate such platforms since its introduction in 2023.

Angel One has stated that its focus remains on providing reliable investment products, and it is working towards launching the bond offering in the coming months. Zerodha, meanwhile, is working on enabling both primary public bond issues and secondary trading of listed bonds through its Kite platform. The brokerage firm believes that regulatory changes, including the reduction in minimum face value or ticket size, have made bonds more accessible to retail investors.

India’s retail bond market remains relatively small, with around one million investors. However, participation increased nearly sevenfold during the previous financial year. Zerodha notes that awareness of bonds among retail investors remains significantly lower than that of equities, making the market’s long-term potential difficult to assess.

Brokerages have already provided investors access to government securities, Treasury Bills, and State Development Loans through exchange-based non-competitive bidding mechanisms. However, increased volatility in equity markets and relatively subdued returns have encouraged investors to diversify beyond stocks. Corporate bonds are consequently emerging as another avenue for investors seeking fixed-income opportunities and portfolio diversification.

The introduction of corporate bonds on these platforms is expected to increase participation in the retail bond market. With more brokerages entering the market, competition is likely to increase, leading to better services and products for investors. This development is significant for India’s retail fixed-income market, as it provides investors with more options for diversifying their portfolios.

In the coming months, investors can expect to see more brokerages offering corporate bonds on their platforms. As the market grows, it is likely to attract more investors, leading to increased liquidity and better prices. The SEBI approval for Zerodha and Angel One is a positive step towards developing India’s retail bond market, and it is expected to have a significant impact on the industry in the long term.

The growth of the retail bond market is crucial for India’s economy, as it provides a new avenue for companies to raise funds. With more investors participating in the market, companies can expect to see better prices for their bonds, leading to increased investment in the economy. As the market continues to grow, it is likely to play a significant role in shaping India’s financial landscape.

In conclusion, the approval of Zerodha and Angel One to offer corporate bonds is a significant development for India’s retail fixed-income market. It is expected to increase participation, improve liquidity, and provide investors with more options for diversifying their portfolios. As the market grows, it is likely to have a positive impact on the economy, leading to increased investment and better prices for bonds.