In the past year, online trading platforms have made corporate bonds accessible to retail investors, thanks to RBI’s relaxation of minimum investment thresholds and the introduction of a 1,000‑rupee face value for debt securities. This has lowered entry barriers and attracted a new cohort of investors who previously relied on equities or mutual funds. High‑yield corporate bonds now offer mid‑teen returns, typically 15‑18% per annum, outpacing the modest gains from the Nifty 50, which has hovered around 10% growth in the last six months.
With equity markets flat and volatility high, many retail investors view debt as a safer alternative that still delivers attractive yields. For the average investor, corporate bonds provide a predictable income stream and lower correlation with the stock market, helping to diversify portfolios. However, issuers’ credit ratings and liquidity risk remain important considerations.
Tax treatment of bond interest is also favorable, with a 10% tax on interest income for residents, which can improve net returns. The surge in retail bond trading could influence market dynamics, potentially tightening liquidity in the corporate bond market and encouraging issuers to offer more attractive terms. As more investors enter the debt space, the overall demand for corporate bonds is likely to rise, which may lead to a gradual shift in the asset allocation preferences of Indian households.