But what about the biggest American giants like Google, Meta, Tesla or NVIDIA, or even the AI ones like Perplexity and OpenAI?

How can you invest in them? 

Well, that is exactly where platforms like Vested Finance are enabling direct investment in US stocks, ETFs, private market, and even global mutual funds and stocks.

So today, we are doing a deep dive into the company profile of Vested, and bringing to you its corporate structure and founders’ background, key features, fees and charges, funding, and what we like and dislike about the platform.

So let's begin.

Founders’ Background & Corporate Structure

Vested Finance was founded in 2018 by Viram Shah and Darwin Arifin.

Viram’s educational background includes an engineering degree in electronics and telecommunications from University of Mumbai and then an MBA in Business from the University of California, Berkeley. Darwin too has a core background in engineering after completing not just his bachelors but even a PhD in chemical engineering. He went on to complete MBA in Business from the University of California, Berkeley, during which he co-founded Vested with his batchmate Viram.

While Darwin left the company in October 2023 after serving the role of co-founder and COO since 2018, Viram has continued to head Vested as its co-founder and CEO. 

As per MCA data (as of 9th March 2026), Vested Finance is registered as Vested Services Private Ltd. in India, and its co-founder and CEO Viram is the amongst the Directors, but not Darwin. 

Now let us understand what Vested Finance does and how it works.

What Does Vested Finance Do?

Vested is a global investing platform that helps Indian investors gain access to  international markets through the following products: 

• US Stocks and ETFs: Offers 10,000+ stocks and ETFs, including Amazon, Apple, Microsoft, Tesla, Nvidia, and many more.

• Managed Portfolios (formerly called Vests): Offers curated baskets/portfolios of stocks and bonds. These can be theme based portfolios like AI, SpaceTech EV, Crypto, etc, risk-based like conservative, moderate and aggressive baskets of stocks and bonds, or sector, industry and market cap based portfolios.

• Global Mutual Funds: Offers exposure to 50+ countries via funds managed by leading asset managers like Fidelity, DSP and BlackRock. 

• Unlisted shares through private market: Through unlisted shares, Vested offers early access to high-growth companies like OpenAI, SpaceX, Canva, Shein, etc before they go public through their IPOs.

As per its website, Vested already manages an AUM of over Rs 8,000 crores and a massive trading volume of over Rs 40,000 crore (as of December 2025). Also note that Vested uses RBI reference rates as benchmark for the translation of USD returns into Rupee.

As far as its funding and revenue are concerned, the company has reportedly raised over $25 million in 9 funding rounds till now, and had a revenue of Rs 6.38 crores in the previous financial year 2024-25.

Fees & Charges for investing in US stocks

• Account Opening: Free for basic plan. Option to opt for yearly premium subscription at Rs 4,500 (Rs 375 per month).

Here’s how the charges vary across these two plans:

*OTC (over-the-counter) securities are traded through a network of broker-dealers rather than a centralized exchange such as NYSE or NASDAQ. These stocks typically cover smaller foreign companies that do not meet exchange listing requirements.

Is Vested registered with SEBI?

No, Vested is not with India’s securities market regulator SEBI yet. But it is registered as a FINRA Broker Dealer in the name of VF Securities, Inc. 

FINRA (Financial Industry Regulatory Authority) is a private American organization that regulates member brokerage firms and exchange markets. 

On the other hand, the SEC (Securities and Exchange Commission) is an independent agency of the US federal government, with the primary purpose of enforcing laws against market manipulation. Vested is an RIA (Registered Investment Adviser) with the SEC as well.

What about taxation?

1.Capital gains tax and Dividends tax

• Capital gains

For long term capital gains (holding period of more than 2 years), the tax rate is 12.5% (without indexation). 

As far as short term capital gains are concerned (holding period of up to 2 years), the tax is as per your applicable income tax slab.

• Dividends

The dividend income you earn from a US stock is subject to withholding tax of upto 25% which the American company deducts on one's dividend payout. 

And in India, that dividend is included as ‘income from other sources’ and then taxed as per your applicable tax slab. But to prevent this double taxation for the investor, the ‘Double Taxation Avoidance Agreement’ (DTAA) is already in place between the US and India, as per which you, as an investor in India, can claim FTC (Foreign Tax Credit) for the tax already paid in the US and offset it against taxes owed in India.  All you need to do is fill the ‘Form 67’ with the Indian tax department before the due date of filing the ITR.

2. TCS on LRS transactions

Before we dig into this taxation, let’s first quickly understand what TCS on LRS means.

• LRS: Basically, your overseas transactions fall under the Liberalised Remittance Scheme (LRS), an RBI scheme that allows you to send up to 2.5 lakh dollars annually abroad. So, you need to keep your transactions such as overseas medical treatment, education, travel, investment in stocks or property, and maintenance of close relatives under this limit. 

• TCS: Next comes the TCS (tax collection at source). FY24-25 onwards, if your foreign spending or investments exceed Rs 10 lakh per financial year, 20% TCS is levied post this threshold limit.

However, note that you can claim the amount of TCS as credit against tax payable while filing income tax returns. 

These are the simple steps to do it:

i) Log in to the Income Tax portal and access your Form 26AS. 

ii) Verify the TCS amount deposited by your bank or authorized dealer. 

iii) While filing your ITR, adjust the TCS against your total tax liability. 

iv) If your TCS exceeds your tax payable, then claim a refund.

Things We Like About Vested Finance

• Wide range of investment options: From 10,000+ US stocks and ETFs, theme, sector, industry, market cap and risk based vests (now called managed portfolios), to global mutual funds from top asset managers like DSP and BlackRock, Vested has been offering a diverse set of investment opportunities for Indians to go global.

• Strong US regulatory backing: Vested’s registration as a FINRA broker-dealer and SEC RIA enable it to offer solid investor protections like SIPC coverage of upto $500,000, which helps build trust for cross-border investing. Moreover, Vested has a designated clearing broker ‘Drivewealth', which helps with the processing of Orders and Unit allotment.Drivewealth is a member of FINRA and SIPC, and is registered as a broker dealer in all US states.

• Enables access into fractional shares: The US market, unlike the Indian stock market, has a concept of fractional investing, where you can buy a fraction of a share. Presence of platforms like Vested helps in accessing this feature, and that too for global investing. Investors can start investing with as low as just $1 (approx Rs 90).

Things We Don’t Like About Vested Finance

• No SEBI oversight: While Vested does operate through US regulatory frameworks, the lack of SEBI oversight can be a concern for investors who prefer platforms regulated directly in India, as this could mean limited recourse for local disputes compared to SEBI-registered platforms.

• Complex structure and costs: Investing internationally through platforms like Vested does involve several costs, be it the brokerage, withdrawal fees, conversion fees, LRS related bank charges, etc. When combined, these costs may reduce your overall returns, especially for smaller investment amounts. Also, remittances fall under RBI's $250,000 LRS limit, along with 20% TCS. All this can add paperwork and potential cash flow drag for high-volume investors.

Conclusion

It’s fair to say that Vested Finance has positioned itself as a gateway for Indian investors looking to diversify beyond domestic markets. It is amongst the few platforms doing so on a large scale in India. 

While its wide range of investment options and US regulatory backing are its core strengths, investors should also be mindful of the regulatory landscape, layered costs and tax complexities involved in global investing. Last but not the least, as with any investment platform, it’s important to evaluate whether the features, costs, and regulatory structure align with your own investment goals and risk tolerance or not.

Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision, and it neither encourages nor discourages you from investing in any particular platform or property or any asset class.

But that is changing now with fractional investing coming into the picture and gradually gaining prominence. So today, we are doing a deep dive into an emerging platform in this category: Bengaluru-based PropFTX. They had even appeared on Shark Tank India (Season 5), in the 28th Episode.

In this company profile blog, we will break down who’s behind PropFTX, how its investment model works, where the platform earns its money from, and what we like and dislike about the platform.

Let’s begin..

Corporate Structure & Founder Background

PropFTX was founded in 2023 by Rajeev Chhabra and Varun Singhi. The company is currently bootstrapped and has not raised any external funding yet.

As per MCA data (as of 9th February 2026), both of PropFTX’s co-founders are its Directors.

Let’s have a brief look at the profiles of the co-founders.

1. Rajeev Chhabra: Founder & CEO

Rajeev has an experience of three decades in the real estate industry, especially in the Business Development vertical of companies like The Phoenix Mills, Alembic Real Estate, and Adel Landmarks. He completed his B.Com (Hons) from the prestigious Delhi University’s Kirori Mal College, and then his MBA (Marketing) from the YMCA Institute of Management Studies.

2. Varun Singhi: Co-Founder

Varun has core experience in technology and cryptocurrency industry, with key roles in companies like Wipro, Cognizant, DXC Technology, KapitalDX and Aquarius Exchange before starting PropFTX. As far as his educational background is concerned, Varun had completed his Bachelor of Engineering - BE, Electronics and Instrumentation from the Anna University Chennai, and he went on to do MBA (Business Administration and Management) from the Asia School of Business.

Now let us understand what PropFTX actually does and how it works.

What Does PropFTX Do?

Bengaluru-based PropFTX is a fractional real estate investment platform that allows investors to own fractions of premium real estate assets through secure digital tokens. This makes real estate accessible by reducing the entry cost in real estate from crores to a few lakhs or even lower. The lowest deal size we saw on their platform was for Rs. 37,000 (as of 9th February, 2026).

The types of real estate offered by PropFTX includes residential properties (apartments, villas, and standalone homes,) commercial properties ( Warehouses, Offices, Data Centres, and more), as well as plots (residential plots, commercial parcels, and farmlands).

How It Works?

Here’s a step by step process of how PropFTX offers fractional real estate to investors:

1. SPV Creation: For each property listed on PropFTX, the platform creates a private limited company called SPV, with up to 200 equity shares (tokens).​ One investor can buy at most 5 tokens, a step taken by the platform to prevent monopolisation.

2. Token Pricing: The property value gets divided by the number of tokens to arrive at the token price. For example, a Rs 1 crore property divided by 200 tokens would result in the token price of Rs 50,000 per token. Investors can buy fractional ownership in that property through those token pieces.​

3. Funding Phase: Your invested money flows directly into the SPV account. The money is held in the escrow account and gets released to the builder only when the property’s pool hits the 100% funding target.

Here, it's noteworthy that PropFTX takes a time of 150 days from the builder to monetize that property. The platform does not buy the property but takes its inventory and opens it for the public to invest in it.

If the property gets under 50% funding after those 150 days, PropFTX gives full refund of the token amount to the investors. Whereas if the funding is 70%-80%, PropFTX’s anchor investors top up for the remaining portion to hit the 100% mark.​

4. Ownership Transfer: If the funding hits the 100% mark, the property title gets registered in the SPV's name and the investors hold shares with blockchain-recorded tamper-proof transactions for transparency, traceability and enhanced security.

5. Income & Management: As and when the tenant pays the rental income from the property or land, it is transferred to the SPV who then transfers it to the token holders monthly. Here, the platform PropFTX's asset management handles maintenance cost, ROC compliance, etc.

6. Exit process: If you want to exit an investment, PropFTX has itself created a resale marketplace on its platform where you can register. But you can do so only after 150 days of lock-in. Also, there has to be an approval from 70% of shareholders of the property if you want to sell your token.

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PropFTX’s Business Model

Now that you have a fair idea about how PropFTX works, let’s also bring to you its business model to understand the key sources from where the platform earns money:

• Builder onboarding fee: 1% of property value upfront (paid by the builder)

• Builder success fee: 3% upon reaching full funding (paid by the builder)

• Investor transaction fee: 2.5%, including 2% standard commission + 0.5% platform services (paid by the investor)

• Resale marketplace fees: 1-2% each from both buyer and seller

What About The Potential Returns?

As per our conversation with PropFTX’s founder Rajeev recently, investors can expect potential returns in the following range*:

• Residential rental yields: 3%-4% annually

• Commercial rental yields: 6%-10% annually

• Residential property appreciation: 7%-8% CAGR (last 15 years average)

• Commercial property appreciation: 5%-6% annually

• Total expected returns: 9%-10% residential, 12%-14% commercial

\ Please note that these are averages, and the actual yield and appreciation will depend on factors such as geography, type of property, etc.*

How Will The Returns Be Taxed?

While there are no guidelines regarding the taxation of tokenzied real estate from the SEBI’s side yet, as per our understanding, here’s how the taxation works.

-For the tokenised real estate offering, the structure is aligned with equity shareholding in the underlying SPV.

-Accordingly, LTCG taxation will be treated similar to listed equity shares:

Long Term Capital Gain (LTCG) applies if held for more than 12 months LTCG is taxed at 12.5% (without indexation) on gains exceeding ₹1.25 lakh in a financial year

Short Term Capital Gain (STCG) at the rate of 20% applies if sold within 12 months.

That said, final tax treatment will depend on individual investor circumstances and existing prevailing tax guidelines at that time. It’s always recommended to consult your tax advisors.

Things We Like About PropFTX

1. Lowers the entry barrier for real estate: With minimum investment amount being as low as Rs 37,000 (as on 9th February, 2026), PropFTX is helping lower the entry barrier for real estate, which otherwise requires lakhs or crores of Rupees.

2. Skin in the game: While their website doesn’t mention anything on these lines, as per our conversation with PropFTX’s founder Rajeev, PropFTX invests in every SPV through a 0.01% stake. In such a case, the platform having its own skin in the game brings an added layer of trust amongst investors.

3. Big names amongst strategic partners: PropFTX’s strategic partners include big names like Microsoft and Amazon Web Services (Cloud partners), SBI and DBS Bank (Banking partners), PayU (Payment partner) and Castler (Escrow partner). This boosts investor confidence on the platform’s reliability and structure.

4. Experienced leadership: The vast experience and knowledge that PropFTX’s founders bring in the real estate and technology segment adds credibility to the platform.

5. Escrow-secured investments: All funds pooled in from investors are safeguarded in Escrow, thus ensuring secure and transparent transaction.

Things We Don’t Like About PropFTX

1. Not regulated yet: Although PropFTX operates within the ROC (Registrar of Companies) compliance framework, it is currently an unregulated platform as there are no clear regulations on fractional investments from SEBI’s side yet.

2. Exit dependency on other shareholders: You need the approval from 70% of shareholders of the property if you want to sell your token. This means that if you don’t get that much approval, you would not be able to exit from the investment even if you want to.

3. Lock-in period: Besides the dependency on other shareholders, there is one more condition when exiting your investment on PropFTX platform – Investors on the platform become eligible to exit your investment only after 150 days of lock-in period. Before that, you can’t exit your investment.

Conclusion

PropFTX is amongst the few platforms representing the growing shift towards fractional real estate investing in India by lowering entry barriers and combining traditional property ownership with digital infrastructure. The platform has an experienced founding team, robust escrow-backed structure, and a transparent SPV-based model.

However, factors such as the lack of formal regulation, lock-in period, and exit dependency on other shareholders make it essential for investors to approach with due diligence.

Please note that this is an opinion blog and not an official research or investment advice*. This blog aims to help retail investors make an informed decision, and it neither encourages nor discourages you from investing in any particular platform or property or any asset class.*

While it’s pretty obvious for Budget expectations to grab the headlines, have you ever wondered how the Budget is actually prepared? How long is the process? And who all are involved in Budget preparation?

Let’s unfold the key steps involved in preparing the Union Budget every year.

How The Union Budget Is Prepared?

The process of preparing the Union Budget process mainly consists of two types of activities- First, the administrative process, wherein the budget along with documents are prepared in consultation with various stakeholders. Second, the legislative process wherein the Budget is passed by Parliament after discussion.

Let’s bring to you a simplified list of the key steps involved in the process of Budget preparation and presentation:

1. The commencement of the Budget process takes place with the issue of ‘Budget Circular’, usually around the month of September each year. For the upcoming Budget 2026, the circular was released in the last week of August.

2. This circular is issued with the purpose of providing guidance to various ministries/ departments in framing their revised estimates for the current financial year and the budget estimates for the upcoming financial year.

   The circular details out the instructions on the preparation of estimates of various types of receipts and expenditure. It also includes the formats and statements in which such estimates are required to be furnished.

3. Upon preparation of such estimates, the ministries/departments need to submit their budget proposals in the form of a Provisional SBE (Statement of Budget Estimates) in the hard copy format to the respective sections in the Budget Division.

4. It is then the Budget Division of the Finance Ministry which prepares briefs for the pre-Budget meetings, wherein detailed discussions are held on various items of expenditure on the basis of trends of expenditure, unspent balance, status of approval of the schemes/projects etc.

   The requirements of funds for all categories of expenditure along with receipts of the departments are discussed during such pre-Budget meetings chaired by the Expenditure Secretary.

5. Such meetings are followed by various steps in October to January period, like processing of actual figures by the Budget division, communicating them to the ministries/departments, Finance Minister’s meetings with Stake Holder/ Groups/Chambers of Commerce/ Associations, etc, receipts of SBEs (Final) from ministries, Proposals and Finalization of Draft for Finance Bill, etc.

   1. Then in the last week of January, the finalization of the Finance Minister’s Budget Speech is done, followed by obtaining approval of the Prime Minister regarding the ‘Summary for the President’ and then the President’s recommendations for the Budget under Articles 112, 115 & 117 (Part V) of the Constitution, which define key financial procedures in the Parliament.

6. Finally on the morning of February 1st, the Finance Minister briefs the Cabinet of ministers on the Budget outline (through a summary) and also briefs them on the Finance Bill.

7. Immediately after presenting the briefing, the Budget is presented in the Lok Sabha along with the Finance Minister giving his/her speech.

8. After the Budget is presented, the Ministry of Parliamentary Affairs (in consultation with the Ministry of Finance) fixes the dates for general discussions on the Budget, in both Lok Sabha and Rajya Sabha.

   The scope of discussion at this stage is confined to general examination of the Budget, policy on taxation as expressed in the Budget Speech of the Finance Minister and general schemes and structures etc. At the end of the discussions, the Finance Minister holds the right to reply to the queries.

9. As far as the Finance Bill is concerned, the consideration and passing of the Finance Bill in Lok Sabha and Rajya Sabha is usually done by 3rd or 4th week of March after the President’s recommendation for amendments to the Finance Bill are taken.

For even deeper details of the Budget preparation, you can read this Budget Manual - https://dea.gov.in/files/budget_division_documents/BUDGET_MANUAL_FINAL_15_11_22.pdf

Does the public have any say in the Budget making process?

Given that the Budget affects us all in some way or the other, this question is bound to come in anyone’s mind. And the answer is yes.

From the year 2015, the Indian government started inviting public suggestions “to Infuse more transparency into Budget making exercise and to have people as partners to the process of Budget making.” Even for the upcoming Budget 2026, the Finance Ministry had invited suggestions from the period December 17th 2025- January 16th 2026.

Now that you have a fair idea about the Budget process, let us bring to you the list of India’s Finance Ministers who have presented the Budget till date.

List of India’s Finance Ministers who have presented Budget

Here’s the list of all of India’s Finance Ministers in the post independence era:

But what if I told you there were years when those ‘boring’ debt funds left the stock market in the dust? And not just once or twice, but multiple times!

Buckle up as we time-travel through 2011, 2015, and 2022- the epic plot twists where debt funds stole the show while equities took the back seat.

Chapter 1: The 2011 Crash- Scams, Inflation, and Debt's Quiet Rise

2011 was a year in which India saw two unwanted double-digit figures. One in the form of a 10% inflation rate, and the other in the form of a 25% drop in the equity market. But amidst all this, debt funds turned out to be the real winners.

Let us deep dive to help you understand how it all happened:

On one hand, the government was stuck in policy paralysis amid the 2G scam's impact on the telecom sector's regulatory framework and public trust. On the other hand, the coal scam had led to an estimated financial loss of around ₹10.6 lakh crore to the government.

Moreover, the RBI had hiked the repo rate multiple times from 6.5% to 8.5% to fight the 9%-10% inflation that year. This move adversely impacted company profits, as they had to pay more interest on corporate loans, thus making the cost of capital expensive and hitting industrial and overall economic growth.

Amidst all this, the equity market plunged, with Nifty 50 suffering a 25% drop in 2011’s calendar year.

Let’s look at the data.

(Returns taken from 1st January 2011 to 31st December 2011)

(Data sources: https://www.nseindia.com/reports-indices-historical-index-data https://www.amfiindia.com/net-asset-value/nav-history)

So, how did debt funds become the unsung hero?

• While the RBI hiked repo rates multiple times, it also injected liquidity via open market operations (OMO) and CRR cuts late in the year.

• This meant that the RBI pumped money into the financial system by buying bonds directly through OMO, and also cut the CRR (Cash Reserve Ratio) so that banks had to keep less cash with the RBI, thus freeing up more money to lend. This boosted bond sentiment.

• With the equity market bleeding, investors preferred to park money in safer instruments like debt funds for stability.

• With more demand for debt funds, fund managers decided to buy more bonds with fresh inflows. This pushed bond prices up via demand-supply dynamics, increasing capital gains and NAVs of debt funds.

So, you see, multiple reasons worked in favour of debt funds and against the equity market in 2011. The numbers have also been there to prove.

Next, let's hop onto another year that saw debt funds beating equities.

Chapter 2: 2015's Black Monday & China's Shockwave

After 2011, let’s fast-forward to 2015. 2015 proved that 2011 was not an outlier case. There were multiple instances wherein the 1 year returns of debt funds comfortably beat those of equities. Let's focus on 2015 for now and understand what all had happened:

• China's sharp devaluation of its currency, the yuan renminbi (CNY), on August 11 surprised the world.

• While the move was claimed as reforms for a market-oriented economy, it actually sparked worldwide repercussions, including a ‘Black Monday’ on August 24 when Sensex and Nifty 50 crashed 6% in a single day, and US indices like S&P 500 and Dow Jones dropped 5%-6%.

• Amid fears of the US Fed's first rate hike in a decade, FII net outflows from Indian equities hit around $2.5 billion, while collapsing global commodity prices hurt metal, oil & gas, and cyclical stocks.

• Domestically, RBI Governor Raghuram Rajan introduced the Asset Quality Review (AQR), forcing banks to recognize NPAs instead of hiding bad loans, causing huge reported losses in banking stocks. Nifty 50 ended the year with a 5% drop.

And yet again, debt funds came out as winners.

The data in the table below clearly shows how debt funds were once again able to outperform equities, this time in the year 2015

(Returns taken from 1st January 2015 to 31st December 2015)

Here’s why they stole the show:

• RBI cut the repo rate by a total of 125 basis points between January and September (from 8% to 6.75%), making existing higher-coupon bonds more valuable than newly issued lower-yield ones, rallying bond prices, and boosting debt fund NAVs as they invest primarily in fixed-income instruments.

• With the stock market in negative, China's devaluation, and commodity price crashes, risk-averse investors turned to less volatile bonds and debt funds. This influx, coupled with rate cuts, quietly drove the outperformance of debt funds over equities that year.

Now let's focus on a very recent instance wherein debt funds turned out to be the winners against equities. It happened just three years ago, in 2022!

Chapter 3: 2022's Rate Storm - The War & IT Sector Crash

After 2011 and 2015, 2022 was another year when debt funds outperformed equities. But this time, the equity market wasn’t bleeding in red, but had stayed rather flat. Let us deep dive to understand what happened in 2022:

• Firstly, the RBI had aggressively hiked repo rates by 2.25% in just 8 months (May to December 2022) to fight post-Covid inflation. This increased the borrowing costs for companies and hurt profits, keeping Nifty and Sensex flat.

• Secondly, the FII exodus repeated 2015's pattern as the US Fed hiked rates too, thus making US Government Bonds attractive and pulling foreign money from emerging markets like India.

• Also, amid US recession fears, the Nifty IT index crashed around 25%, dragging diversified equity funds; small-caps cooled off after 2020-2021 rallies. The Russia-Ukraine war broke out in February, spiking oil and commodity prices. With India being a heavy oil importer, inflation rose amidst all this.

• Amid global uncertainty, the equity market remained volatile, and the Nifty 50 ended the year with just 2.7% upside.

And again, debt funds turned out to be the outperformers.

Although 2022 did not see debt funds significantly beat the equity market (unlike 2011 and 2015), but they still managed to edge past it.

(Returns taken from 1st January 2022 to 31st December 2022)

Here’s what gave them a boost:

• As interest rates rose in 2022, amid multiple repo rate hikes by the RBI, debt fund managers immediately reinvested the maturing bonds, T-bills, etc into new ones that were offering higher rates.

• Domestic debt funds, driven by local corporate demand and banking liquidity, proved insulated against global FII selloffs and maintained steady returns, unlike equities.

Conclusion

From 2011's crash, 2015's China panic, to 2022's rate-hike storm, we brought to you multiple instances which prove that ‘boring’ debt funds do hold the potential to outperform the mighty stock market.

Yes, in the long run, say 4-5 years or 10 years, equities continue to beat debt, but for the short term, for goals like a foreign vacation corpus, purchasing a vehicle, or even parking your emergency fund, debt funds are an apt choice.

So, the point we are trying to put across is that diversification is a key tool that can give your portfolio that edge. While equities keep doing their work in the long run, debt funds can be the ‘calm amidst the chaos’, especially when all you can see is the color red in your equity portfolio!

Please note that this is an opinion blog and not an official research or investment advice. The blog neither encourages nor discourages you from investing in any particular asset class or platform.

If you would like to learn more about the world of investments, you can join the ALT Investor community here. We have various industry experts and fellow investors as part of our community who can help you with your queries and provide useful insights!

Well, that’s exactly where fixed income comes in. They add the much-needed layer of diversification to your portfolio, acting like ‘calm in the chaos’, providing that much-needed stability to your portfolio, protecting it from market volatility.

So today, we deep dive into 5 popular fixed-income investment options that you can consider adding to your portfolio for more stable and predictable returns. We’ll also compare each of them on key parameters such as risk, liquidity, returns, and taxation.

1. Fixed Deposits

Do they even need an introduction? FDs are perhaps the most popular investment options in our country. They offer stability in returns as their interest rate is locked for the entire FD tenure.

As far as liquidity is concerned, banks and NBFCs usually offer an instant withdrawal option, though it comes with a penalty of around 0.5%-1%.

The interest rates on FDs currently range around 3%-8% across various banks and NBFCs. Moving onto the taxation part, the interest on FDs is added to your ‘other income’ and gets taxed as per your income tax slab. 10% TDS also gets deducted if your interest income exceeds Rs 50,000 in a financial year.

Also, one thing that gives bank FDs an edge over NBFCs, although the latter often offers slightly higher FD rates, is that bank deposits are covered under DICGC, a subsidiary of RBI. This DICGC cover is not extended to NBFC’s deposits. (Read more about the DICGC insurance HERE)

2. Bonds

While the stock market often steals the spotlight in India, not many investors are aware that our country also has a ₹238 lakh crore bond market. Certainly not a small number!

But what exactly are bonds? Simply put, when you buy a bond, you are lending money to the issuer- be it a company, government, municipality, or a corporation. In return for your invested money, the issuer promises to pay you a specified rate of interest (called as coupon) during the tenure of the bond, and repay the principal (known as the face value or par value of the bond), when it reaches maturity.

There are two major categories of bonds in which you can invest:

• Government Bonds

The central and state governments in India issue government bonds to fund public projects such as schools or roads, cover budget deficits, or implement social welfare programs. Though their interest rates usually tend to be around 5.5%-7%, they can sometimes go up to around 8%-9%, with the interest being payable mostly on a quarterly or half-yearly basis.

For instance, these two government bonds on an OBPP platform are offering returns of around 8%-9%.

Coming back to government bond’s safety, the reason they are regarded highly for their safety is that the government itself backs these bonds. Moreover, you can start investing in government bonds for as low as Rs 100, and their tenures range widely from as short as 2-3 months to as long as 40-50 years.

• Corporate Bonds

Corporate bonds are the bonds issued by public or private companies incorporated in India. Moreover, a company incorporated in India, but part of a multinational group, can also issue corporate bonds. A statutory corporation like the LIC (Life Insurance Corporation) is also eligible to issue corporate bonds in India.

In return for your invested money, the issuer gives you periodic interest payments and eventually your principal (the money you invested) back, when the bond matures at the end of the tenure.

Interest rates on corporate bonds generally range around 9%-14%, payable monthly, yearly, half‐yearly or quarterly. Their tenure can range from 2-3 months to 5-6 years.

As far as liquidity is concerned, some bond platforms do offer the flexibility to sell the government or corporate bond before maturity. However, it is dependent on finding a buyer for the bond, which is not always guaranteed.

Coming to the taxation rules, they vary for government bonds and corporate bonds.

For government bonds, interest income gets added to your ‘income from other sources’ and is taxed as per your income tax slab. As far as capital gains are concerned, STCG is taxed as per your tax slab rate (holding period less than 1 year), and LTCG is taxed at 12.5% (holding period equal to or more than 1 year).

For corporate bonds, the taxation depends on whether it is a listed or an unlisted bond.

For listed bonds: STCG taxed as per your tax slab rate (holding period less than 1 year), LTCG taxed at 12.5% (holding period equal to or more than 1 year).

For unlisted bonds: W.e.f. July 23, 2024, all unlisted bonds are treated as short-term assets, regardless of holding period. So, they get taxed as per your applicable slab rate.

Also, 10% TDS on interest earned is levied on government bonds as well as both listed and unlisted bonds.

3. SDIs (Securitized Debt Instruments)

Another fixed-income investment option is Securitized Debt Instruments (SDIs). Think of SDIs like mutual funds, but for loans.

Wait, wait, they are not as complex as they sound. Let’s simplify it.

First, a bank or NBFC bundles its existing pool of loans, such as gold or car loans. Then it partners with an arranger like Grip Invest to convert this pool into investible units. This pool is then transferred to an SPV- Special Purpose Vehicle, which is backed by collateral.

An independent SEBI-registered trustee monitors this overall structure, while a credit rating agency assigns a rating to the SDI. Once all this is done, the SDIs are listed and offered to investors. As and when borrowers keep repaying the loans of the pool, a servicer (could be the originator or arranger or a third-party) collects those payments, passes them through the SPV, and distributes the interest and principal to investors at the said frequency.

When it comes to liquidity, SDIs are not amongst the most liquid fixed income options, mainly because the Indian debt market is not that mature yet. As far as returns are concerned, SDIs offer around 12%-14%, with tenures ranging from around 6 months to 4 or 5 years.

It's noteworthy that SDIs are a regulated fixed-income product in India. Their regulation is primarily overseen by SEBI, which introduced the regulatory framework in 2008, and has undergone several amendments to adapt to changing market conditions and investor needs.

Additionally, the RBI was the one who established guidelines for securitisation in 2006, which eventually laid the groundwork for the securitisation process that SEBI later regulated.

Taxation of SDIs involves the interest income getting taxed as per your applicable slab rate, whereas TDS of 10% (w.e.f. 1st April 2025) is also deducted.

4. PPF (Public Provident Fund)

It’s a no-brainer that PPF is one of the safest investment options in India, given that both the principal as well as interest components are backed by the sovereign guarantee of the government of India. A big advantage that PPF holds is that the principal invested, interest earned as well as the maturity amount are all completely tax-free.

The interest rate on this fixed income investment option has remained unchanged at 7.1% p.a. since April 2020, but the Finance Ministry does review it on a quarterly basis.

Perhaps the biggest drawback of PPF scheme is its lower degree of liquidity due to its long lock-in period of 15 years. But it does offer some degree of liquidity in the form of facilities such as partial withdrawals and premature closure, subject to certain terms and conditions stated under Public Provident Scheme, 2019.

For instance, partial withdrawal can be only be done 5 years after opening the PPF account, and even then you can withdraw up to 50% of the balance. As far as premature withdrawal is concerned, full withdrawal can be done after 5 years of opening the account, but only with a valid reason. A 1% reduction in interest rate would also be applicable in such a case.

You can read it in detail here: https://www.nsiindia.gov.in/(S(kbf2jq45myxpidf530jbhd45))/InternalPage.aspx?Id_Pk=169

5. EPF (Employee Provident Fund)

If you are a salaried employee, you are most likely contributing towards EPF every month. EPF is managed by the Employees' Provident Fund Organisation (EPFO) and is a compulsory deduction from employees' salaries in eligible organisations.

The employee needs to make EPF contributions of 12% of the basic salary + dearness allowance per month.

However, EPFO has put a wage ceiling of ₹15,000 for mandatory EPF membership. So the employees having basic pay of up to Rs 15,000 are included in EPF. Those with higher than Rs 15,000 basic pay can become EPF members voluntarily.

Coming back to the monthly contribution for members with basic pay within the ceiling of Rs 15,000, the contribution would be 12% of (basic pay + DA). Suppose your basic pay + DA is Rs. 10,000, your mandatory contribution would be 12% of it, which is Rs 1,200. Whereas if you have the pay of Rs 15,000 (which is the upper limit), your contribution would come out to be Rs 1,800.

So, given that Rs 15,000 is the maximum wage ceiling for mandatory contribution, an employee’s maximum contribution becomes Rs 1,800 for EPF account.

If you have a higher-than-Rs 15,000 pay and want to contribute a higher amount, you can do that as well. Employees can voluntarily contribute a higher amount of up to Rs 15,000, but the employer is not under any obligation to pay at such a higher rate.

Remember that the employer needs to match the employee’s mandatory contribution, but not the voluntary one. Moreover, for organisations with less than 20 employees, the mandatory contribution requirement is 10%, not 12%.

As far as EPF's interest rate is concerned, it was declared as 8.25% p.a. for FY24-25, whereas the interest rate for the ongoing FY25-26 is yet to be declared. The interest gets credited to the employee’s EPF account at the end of the financial year.

Coming to the taxation part, the interest on an employee's contribution to an EPF account was tax-free until the government introduced new tax rules in FY21-22’s Union Budget.

April 1st, 2021 onwards, EPF contributions above Rs 2.5 lakh during a financial year will be taxable in the hands of the employee. This interest is also subject to TDS of 10% (20% if you do not provide PAN). Note that these new taxation rules have been applicable only on employees’ contributions and not to those made by the employer.

Now you may wonder, if the upper limit is Rs 1,800 per month (which makes the annual contribution Rs 21,600), when will the Rs 2.5 lakh contribution come into the picture? Well, that would happen if you voluntarily contribute a higher amount through VPF (voluntary provident fund). That contribution goes into your EPF account only, it's just that an added contribution goes towards your EPF.

As far as withdrawals are concerned, the EPFO had recently made changes to the withdrawal rules in October 2025.

Key highlights are these:

1. Partial withdrawal conditions simplified: The existing 13 types of partial withdrawal provisions have been merged into a unified framework of 3 categories:

• Essential needs cover purposes such as illness, education, marriage

• Housing covers buying, building, or repaying loans on a house

• Special circumstances cover unfortunate situations like natural calamities or unforeseen financial stress due to reasons like job loss.

2. Withdrawal amount increased: Before the simplification of norms, EPF members were allowed to withdraw only their own (i.e. employee) contribution and interest. Now, the withdrawable amount will also include the employer contribution.

3. Uniform tenure for withdrawals: Earlier, the eligibility to withdraw depended on how long you worked, such as 3 years, 5 years or even 7 years. EPFO has now removed these varying eligibility periods. All kinds of withdrawals now have a uniform eligibility period of 12 months, irrespective of the reason.

4. Mandatory retention of contribution: To avoid repeated withdrawals that resulted in insufficient EPF balance at the time of retirement, 25% of the contribution now needs to be mandatorily retained to ensure a respectable corpus at retirement.

But in case you unfortunately become unemployed, 75% of the balance (including employer and employee contributions and interest earned) can be withdrawn immediately, while the remaining 25% can only be withdrawn after one year.

As far as risk is concerned, EPF is considered a very low-risk investment option, given that it is a government-backed social security scheme, administered by the EPFO, under the Ministry of Labour & Employment.

A Quick Comparison Of These 5 Fixed-Income Investment Options

Conclusion

In the end, we can conclude that each of these popular fixed-income investment options has its own set of features, risks, returns potential, etc, and the decision to choose amongst these depends on the investor’s financial goals, investment horizon, risk appetite and return expectations.

For example, investors aiming for long-term stability and high tax benefits can opt for PPF and EPF, as these two offer the lowest risk despite low liquidity.

Whereas investors who have a low risk appetite and prefer a high level of liquidity can go for fixed deposits (FDs).

For investors who are seeking high returns (of up to 14%-15%) and are willing to take moderate risk, they can go for corporate bonds and SDIs.

On the other hand, government bonds can be a suitable low-risk investment option for those who are seeking a safe fixed-income investment option beyond the regular FDs.

But what if one day, your bank unfortunately shuts down? Though the odds of such a thing happening are really low, they are not zero. Remember the collapse of PMC Bank or Lakshmi Vilas Bank? Or the Yes Bank fiasco of 2020? These were some of the recent instances that shook India’s banking industry.

So what really happens to your deposited money if a bank is staring at a dead end? Who protects your money? And to what extent?

Is your money really safe?

In this latest blog of ours, we’ll deep dive and explain all this to you. So read on to know how safe your bank’s deposits truly are.

Who protects your money if a bank shuts down?

The DICGC (Deposit Insurance and Credit Guarantee Corporation), a subsidiary of the RBI (Reserve Bank of India), protects your money in case a bank shuts down. The corporation offers insurance cover for deposits opened with scheduled banks. DICGC was founded in the year 1978 and falls under the jurisdiction of India’s Ministry of Finance.

Its functions are governed under the 'The Deposit Insurance and Credit Guarantee Corporation Act, 1961' (DICGC Act) as well as 'The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961'. These were framed by the RBI.

Why did the RBI create DICGC?

Before we deep dive into the role of DICGC, let us understand when and why the RBI created this subsidiary. On a larger scale, it all started more than six decades ago in the year 1960, when the back-to-back failure of two banks- Laxmi Bank and Palai Central Bank prompted the RBI to first introduce ‘Deposit Insurance Corporation’ (DIC) in 1962.

Before India, the USA was the only country that had introduced such a concept of deposit insurance. The USA’s Federal Deposit Insurance Corporation (FDIC) has been running since 1933.

RBI’s next step came through the formation of a public limited company named ‘Credit Guarantee Corporation of India Ltd. (CGCI)’ on January 14, 1971.

Seven years later, in 1978, the DIC and CGCI were merged and hence the DICGC (Deposit Insurance and Credit Guarantee Corporation ) was formed on July 15, 1978. Even the Deposit Insurance Act, 1961 was amended and renamed as ‘The Deposit Insurance and Credit Guarantee Corporation Act, 1961’. This merger was done to integrate the functions of deposit insurance and credit guarantee.

Now let us come back to the big question- how much of your money is protected?

To what extent does DICGC insure your deposited money?

As per DICGC’s insurance program, your bank deposits are insured up to Rs 5 lakh, per bank and depositor, in the event of bank failures. This limit was not always Rs 5 lakh.

Here’s how the insurance cover has grown over the years:

Note that both the interest and the principal component of your deposits are insured for the following types of bank deposits:

• Savings accounts

• Current accounts

• Fixed deposits

• Recurring deposits

The insurance cover, however, is at a bank level, and not account level.

So, for example, if you have Rs 2 lakhs kept in a savings account and Rs 1 lakh as an FD in ‘XYZ’ bank and another Rs 3 lakhs in the FD of ‘PQR’ bank. In such a case, the entire Rs 3 lakh in the first bank and the Rs 3 lakh in the second bank will be separately insured to the full extent. Even though the total of all these deposits is Rs 6 lakhs, remember that DICGC’s Rs 5 lakh coverage is ‘per bank, per depositor’. Since your deposit in each of the two banks is below the threshold limit of Rs 5 lakhs, it is fully insured.

On the other hand, if you had kept, say, Rs 1.5 lakhs in a savings account and Rs 4 lakhs in an FD of the same bank (total deposits coming to Rs 5.5 lakhs), DICGC insurance would only be applicable up to Rs 5 lakh, and not on the remaining deposit of Rs 50,000 in this case.

So now that you know what is covered and how, it’s equally important to know what is NOT covered under DICGC insurance:

• Deposits kept in a Non-Banking Financial Company (NBFC)

• Deposits kept in Land Development Banks

• Mutual funds

• Stocks and bonds

• Exchange Traded Funds (ETFs)

• Cryptocurrencies

• Deposits of foreign Governments;

• Deposits of Central/State Governments;

• Inter-bank deposits

Does DICGC cover all banks in India?

DICGC covers the following banks:

• All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.

• All state, central and primary cooperative banks, also called urban cooperative banks

Here’s DICGC’s list of insured banks under it: https://www.dicgc.org.in/insured-banks . As of March 2025, 1982 banks are insured under DICGC.

You can also check the list of de-registered banks as well as the banks which are put under AID. For the unversed, AID refers to ‘all-inclusive directions", under which RBI places restrictions on banks in order to protect depositors' interests or even the bank's own stability. Banks put under AID may be allowed to continue to operate, but with certain limitations as per the directions stated by the RBI.

Who pays for this insurance? Bank or the customer?

Insurance and premiums go hand-in-hand. Certainly, the DICGC would not provide such an insurance without expecting any premium in return, right? While this insurance protects the depositor’s money kept in the banks, the insurance premium is borne entirely by the bank, and it cannot be passed on to the depositors.

DICGC’s 2024-25 report had mentioned that the total premium collected by DICGC from these banks stood at Rs 26,764 crore, and the total claims settled by DICGC during FY24-25 stood at Rs 476 crore.

Also, DICGC states that no bank can withdraw from this insurance scheme, and it is compulsory. However, on the other hand, DICGC can cancel the registration of an insured bank if it fails to pay the premium for three consecutive periods. But the DICGC needs to give one month's notice to such a bank before cancelling its registration.

Remember that your bank deposits will remain covered under DICGC only until the date when the bank’s registration gets cancelled.

When does DICGC become liable to cover the insured bank’s deposits?

There are three instances wherein DICGC becomes liable to pay the insured amount:

-If a bank goes into liquidation: DICGC is liable to pay to the liquidator (an official appointed by the Registrar of Cooperative Societies (RCS) or Central Registrar (CRCS) to act as the link between the depositors and DICGC) the claim amount of each depositor up to Rs 5 lakhs within 2 months from the date of receipt of the claim list from the liquidator. The liquidator has to disburse the claim amount to each insured depositor corresponding to their claim amount.

However, banks do have the right to set off their dues from the amount of deposits as on the cut-off date. The deposit insurance is then available for the remaining amount after netting off such dues.

-If a bank is reconstructed or amalgamated or merged with another bank: DICGC has to pay the bank the difference between the ‘full amount of deposit or the limit of DICGC cover (Rs 5 lakhs), whichever is lower’, and the ‘amount received by the depositor under the reconstruction/ amalgamation scheme’. This payment needs to be made within two months from the date of receipt of the claim list from the transferee bank.

-If a bank is placed under directions by RBI: DICGC becomes liable to pay an amount payable under section 16 if RBI’s directions prevent depositors from accessing their deposits in the bank.

As per Section 16 of the DICGC Act, DICGC is liable to settle deposit insurance claims of insured banks within 90 days, subject to the submission of a list showing outstanding deposits of each depositor by the insured bank.

The role of bank and depositors in the claim process

• The most important task for depositors is to submit a claim willingness form to the bank. While there is no specific time limit to this task, depositors need to keep two things in mind.

• Firstly, the bank should still be under AID at the time of depositors’ submission of the willingness form. Secondly, given that DICGC needs to settle the depositor claims within 90 days, depositors should ideally try to submit the form within 45 days (of imposition of AID), which is the statutory timeline for banks to submit the depositors’ data and claim list to the DICGC.

• The claim amount (including interest) payable to each depositor is calculated after setting off loans and advances and clubbing of deposits. Banks prepared the depositor-wise list of claim amount after taking the date of imposition of AID as the cut-off date, as per which the list is prepared.

• DICGC is liable to settle the deposit claims within the next 45 days after the bank shares the required forms and lists within 45 days from being placed under AID. This makes the total timeline equal to 90 days for DICGC to settle the deposit insurance.

• Note that in this 45-day period after getting claim forms and depositor’s list, DICGC needs to verify the genuineness and authenticity of the claims made and also ascertain the willingness of each depositor to receive the amount due from the bank. This needs to be done within 30 days out of that 45-day available period.

• Once the verification is done, DICGC needs to pay the depositors within 15 days. This can be done either directly or by getting it credited in the account of the depositors through the insured bank or through the liquidator.

In short, the first 45 days of the total 90-day window involve the bank and depositors submitting the depositor list and claim form, respectively, to the DICGC. Once that is timely done, the next 45 days are important for DICGC to review, verify and settle the claims timely.

What can depositors learn from various banking crises?

Remember the Yes Bank fiasco of 2020? RBI had imposed a month-long moratorium on the bank, including a restriction that customers could withdraw up to Rs 50,000 from their Yes Bank accounts.

Even as recently as this year, the RBI had placed Mumbai-based All India Co-Operative Bank on moratorium and announced restrictions on its deposits and withdrawals.

There have been some more such cases in India’s banking history. These moratoriums are often imposed by the RBI to give banks time to address their underlying issues. When the RBI places a bank under "All Inclusive Directions" (AID), it imposes this moratorium (temporary freeze) on most of the banking activities, especially withdrawals and lending. This gives the concerned bank the time to stabilise.

Meanwhile, your deposits remain insured upto Rs 5 lakh under DICGC. Nonetheless, such restrictions affect the bank’s depositors for sure. After all, not being unable to withdraw your own money from your bank account can be frustrating, right? 

Instances like this can make depositors think about what they can do to minimise the impact of such a banking crisis on them. Well, a simple thing that you, as a depositor, can do is spread out your deposits (FDs, RDs, savings accounts, etc) across multiple banks instead of a single one. This way, if a bank faces a crisis and is placed under moratorium, your entire liquidity does not get affected by it, since you would smartly put money in some other banks as well.

Conclusion

In the end, it’s fair to say that DICGC acts as your dedicated shield against bank failures, offering mandatory insurance coverage of up to Rs 5 lakh per bank, per depositor. Though the insurance premium is paid by the bank, the responsibility of actually exercising your insurance coverage lies with you, the depositor.

Instead of putting all your deposits into a single bank, spread your deposits across different banks to fully leverage the DICGC's insurance limit. Doing so ensures that your deposits, which have been offering you immediate liquidity, continue to remain safe and fully insured.

From DHFL, IL&FS, Essar Steel, Reliance Capital, to Gitanjali Gems, high-profile bond defaults like these had managed to shake investor confidence and went on to reshape risk perceptions in the last decade or so.

While India’s market regulator SEBI's regulatory framework has been evolving over the years to increase investor protection, understanding your rights as a bondholder is equally important.

So in this blog, we have done a deep dive into the concept of corporate bond defaults, the immediate actions required when it happens, the role of debenture trustee, debenture holders’ rights (especially as a retail investor), and the key risks you must factor in when investing in corporate bonds.

First, what is a corporate bond default?

A corporate bond default occurs when the bond issuer fails to make timely payment of either the interest (coupon) or the principal amount on the agreed-upon maturity date. India’s market regulator SEBI formally defines bond default when there is “a delay of 1 day, even of 1 Rupee (of principal or interest) from the scheduled repayment date”, as per Annexure 11 of the SEBI Master Circular released in May 2024.

Who declares the default?

1. SEBI clearly mentions that in case of delay/default in servicing debt obligations, the issuer needs to provide the information to the CRA (Credit Rating Agency) immediately. Failure to do so within 2 days is considered as suppression of material information, post which the CRA can go on to issue a press release stating the suppression of information, and then disseminate the same on its website and to all stock exchanges where the security is listed. The CRA shall also inform SEBI regarding such suppression of information by the issuer and non-cooperation with CRA.

   Also, such suppression of information is considered a violation of the provisions of section 12A of SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, and the penalty in such a case can be Rs 1 lakh - Rs 1 crore.

2. Besides this, SEBI also mandates issuers to provide the credit rating agency with an NDS (No Default Statement) every month, wherein the issuer explicitly confirms that it has not delayed on any payment of interest/ principal in the previous month. Such a statement shall be provided to the credit rating agency on the first working day of the next month itself.

3. The issuer also needs to inform depositories, stock exchanges, and the debenture trustee within 2 working days of the default. Stock exchanges will suspend trading in the defaulted securities within 2 working days of the default intimation. The issuer is also required to provide continuous assessment of the default status—informing the stock exchanges/depositories and debenture trustee on or before the second working day of April every financial year about the updated status of payment, and reporting any developments affecting the default status within 1 working day.​

What happens after a default is declared?

Once a default is declared, it becomes an ‘event of default’ at the ISIN (International Security Identification Number) level, even if the bond was issued under multiple information memorandums.​

Defaults can take multiple forms, from missing a single interest payment to a complete refusal to honour debt they are legally bound to pay. Nonetheless, once a default happens, debenture holders can either exercise their right to enforce security (in case of secured bonds) or go for the ICA option. Read on as we have explained both these options in the latter part of this blog..

But first, let us help you understand the role of ‘debenture trustee’, a term you have already seen multiple times in this blog.

Who are debenture trustees, and what’s their role in the bond market?

A debenture trustee is an independent third party appointed by the issuer company to safeguard the interests of its debenture holders. These trustees play a critical role in ensuring that the terms and conditions of the debenture are followed, and debenture holders’ rights are protected.

SEBI clearly defines the key duties of a debenture trustee as the following:

1. Call for periodical reports from the issuer of debentures.

2. Take possession of trust property in accordance with the provisions of the trust deed.

3. Enforce security in the interest of the debenture holders.

4. Ensure continuously that the property charged to the debenture is available and adequate at all times to discharge the interest and principal amount payable in respect of the debentures and that such property is free from any other encumbrances except those which are specifically agreed with the debenture trustee.

5. Exercise due diligence to ensure compliance by the body corporate with the provisions of the Companies Act, the listing agreement of the stock exchange or the trust deed.

6. Take appropriate measures for protecting the interest of the debenture holders as soon as any breach of the trust deed or law comes to his notice.

7. Ascertain that the debentures have been converted or redeemed in accordance with the provisions and conditions under which they are offered to the debenture holders.

8. Inform the Board immediately of any breach of the trust deed or provision of any law.

9. Appoint a nominee director on the board of the body corporate when required.

Who can be appointed as a debenture trustee?

As per SEBI, entities including a scheduled bank carrying on commercial activity, a public financial institution, body corporate, or an insurance company can act as a debenture trustee, provided it is registered with SEBI to act as a trustee.

Note that it is mandatory for bond issues with maturity beyond 18 months to appoint a trustee.

What does a debenture trustee do when a bond default happens?

The debenture trustee, appointed at the time of bond issuance, becomes crucial when the event of default takes place. The trustee acts as a legal representative of bondholders and must take immediate protective actions in case of default.

Next, within 3 days of a default, the debenture trustee must seek investor consent for two key actions:

1. enforcement of security (if the bond is secured), or

2. entering into an Inter-Creditor Agreement (ICA) for debt restructuring

The trustee is also required to convene a meeting of investors within 30 days of the default to discuss courses of action.​

The trustee's obligations include communicating promptly with bondholders about the default and action taken, monitoring the company's compliance with debt covenants, and taking necessary legal action on behalf of bondholders.

If you are wondering what covenant breaches are, we’ve explained this concept in this detailed blog of ours: https://blog.thealtinvestor.in/blusmart-to-pharmeasy-what-are-covenant-breaches

It’s noteworthy that covenant breaches can be seen as one of the red flags that signal a possible default in future. For example, if the issuer tends to breach financial covenants, such as maintaining a certain ratio of net borrowings to total equity, it might indicate some problems with their financials. While every covenant breach may not always translate into a default later, investors should watch out for such signs.

Coming back to the trustee’s obligations, it can appoint a nominee director on the company's board to safeguard investor interests in case two consecutive defaults occur in interest payments or the issuer fails to properly create and register the security which it had promised to debenture holders, or there is a default in redemption of debentures.

Now coming back to the enforcement of security – what does this actually mean?

What does enforcement of security actually mean?

Well, as an investor, voting for enforcing the security means that the Trustee will take legal actions to seize, sell, or realize this collateral, and use the proceeds from the sale to repay you and other investors.

There are both pros and cons of enforcing security:

Pros:

1. Enforcement of security can give you a better outcome in case you suspect that the company’s position will worsen in the near future.

2. Enforcement of security can ensure that all ISIN holders are given equal treatment. Here, it is noteworthy that voting happens at an ISIN level, so each ISIN gets treated as a separate decision-making unit.

3. Enforcement of security can turn out to be a relatively faster recovery mode if the collateral provided is strong.

Cons:

1. Enforcement of security is a lengthy and uncertain process that can take months or even years.

2. Legal proceedings upon enforcement may divert the issuer’s focus from repayment, since a lot of legalities, compliance, and issues will come up for handling.

3. It becomes harder to go back to the cooperative repayment plan once the legal action starts. Court visits and insolvency processes have rigid timelines of their own.

4. Enforcement of security is mostly a costly affair, because if the cost of enforcing security is more than the Recovery Expense Fund (REF), the additional amount needs to be paid by the debenture holders.

So, if the company genuinely has the ability to make repayments after taking a bit more time or minor restructuring, then it might be better to not to go ahead with the enforcement of security. Voters may also choose not to pursue the enforcement of security in a bond default if the associated negative consequences, such as the high cost and complexity of legal action, outweigh the potential financial recovery.

However, if bond holders feel that the issuer may not pay without enforcing security, they may choose to exercise this option.

How does enforcement of security happen?

The voting process is slightly complex. Here’s how it works:

Any major action to be taken by the trustee (such as enforcing security) requires approval of a super-majority of investors. SEBI defines ‘majority of investors’ as not less than 75% of the outstanding debt by value and 60% by number of investors, at the ISIN level.

Simply put, for the trustee to proceed with the enforcement of the security:

• At least 75% of the total outstanding principal amount (of that ISIN) held by those voting must be in favor of enforcing the security, and

• Those in favor must also constitute at least 60% of the number of debenture holders

An important point to note is that according to SEBI’s master circular (para 3.3.6), the majority has to be at an ISIN level. This means:

1. Each ISIN gets treated as a separate decision-making unit.

2. For the trustee to go ahead with the enforcement of security for a particular ISIN, that ISIN individually must cross the super-majority threshold:

• 75% of the outstanding value

• and 60% of the number of holders (both criteria met within that ISIN)

What if there are not enough votes in favour of enforcing security?

Let’s first understand the concept of negative consent.

Essentially, SEBI says that the default vote is considered FOR enforcement of security. So if a debenture holder does not vote at all, his/her vote is, by default, considered as FOR enforcement of security.

If a debenture holder does not want to enforce security, they must explicitly vote against it, else it is assumed that they want to enforce security.

And this becomes a problem, because unless the super-majority of debenture holders (75% by value as well as 60% by number) don’t vote against it, enforcement of security goes on to take place.

Take the example of what happened in the case of TruCap — During the voting process, many debenture holders had not voted until the said deadline, which by default, was taken as consent to go ahead with enforcement of security. This gave the debenture trustee no choice but to start the process.

Luckily, TruCap managed to repay the entire amount to the investors before the trustee started with legal proceedings. Else, who knows, the process may still have been stuck.

Now, besides enforcement of security, a debenture trustee can also seek investor consent to go for an Inter-Creditor Agreement (ICA).

What is an Inter-Creditor Agreement (ICA)?

In the context of debt restructuring and bond defaults in India, ICA is a legally binding contract among multiple creditors of a borrower, who share exposure to the same debt. This agreement sets out agreed terms on how creditors will work together in the event of stress or default on the debt, covering a wide range of issues like enforcement, rights to collateral, voting on restructuring plans, and penalties for non-compliance.

In case of bond defaults, the ICA provides a framework to:

• Coordinate collective decision-making among creditors,

• Agree on steps for restructuring the debt,

• Establish which creditor actions take precedence,

• Avoid conflicting or chaotic enforcement actions,

• Ensure that a majority creditor decision can bind dissenting minority creditors.

As far as voting is concerned, it is a crucial part of the ICA process in bond defaults and debt restructuring cases. Key points about voting in ICA are as follows:

• A majority of investors (75% by value of debt and 60% by number) must agree to approve any restructuring or settlement plan.

• Once the required majority votes in favor, the decision will bind all creditors, including dissenting minorities.

What is Recovery Expense Fund (REF) and why is it important?

Back in 2020, SEBI had issued a circular mentioning the creation of REF (recovery expense fund) in order to enable the Debenture Trustees to take prompt action for enforcement of security in case of ‘default’ in listed debt securities. Any issuer that wishes to list its debt securities would need to deposit an amount equal to 0.01% of the issue size (subject to a maximum of Rs 25 lakhs per issuer) towards this fund, before issuing the bonds. This needs to be deposited with the designated stock exchange, as identified and disclosed in its Offer Document/Information Memorandum. You can read more about this fund by clicking here.

Before we end this blog, a word of caution – While it's true that credit risk remains one of the biggest risks that affect your bond investment, it’s not the only risk you should factor in.

Other risks in bond investments

Besides the risk of default, the following are some of the key risks investors should know when investing in corporate bonds:

1. Liquidity Risk: Bonds are not as liquid as equity. Some corporate bonds may be hard to sell quickly, especially those issued by smaller companies or in illiquid markets.

2. Inflation Risk: Whenever the rate of inflation increases, it erodes the value of your investment, as the purchasing power of the bonds' coupons/ yield and principal falls when inflation keeps rising. So, if inflation goes on to rise significantly, the real value of your fixed coupon payments can decrease, thus reducing the purchasing power of your bond income.

3. Reinvestment Risk: This is the probability that an investor will not be able to reinvest cash flows, such as coupon payments, at a rate equal to their current return. Such a risk can arise if your bonds contain a clause that allows the issuer to redeem before the due date/maturity, i.e. do a prepayment. Hence, this can force investors to reinvest at the current market interest rates, which usually tend to be lower than the ones at which they had earlier invested.

4. Interest Rate Risk: As bond prices are inversely affected by interest rate movements, a rise in interest rates could see a fall in bond prices. On the other hand, if interest rates fall, buyers have to pay a higher price to receive a coupon that is higher than the prevailing market rates. All this impacts even more in case you're planning to sell the bonds before maturity, and the value of your existing bonds falls due to an interest rate rise.

Conclusion

In the end, we all can agree that when a corporate bond defaults, the aftermath can indeed be uncertain, complex, and time-consuming. But that is exactly the time when investors need to stay alert and participate actively in processes like trustee votes, and weigh the pros and cons of whatever decision they take regarding legal enforcement.

After all, you being absent from the entire scenario, especially the voting process, can hand over your investment’s destiny into other investors’ as well as the trustee’s hands.

Nonetheless, while SEBI’s framework and trustee mechanisms offer pathways for recovery, the process is not always quick or straightforward. Ultimately, understanding your rights and maintaining realistic recovery expectations can help you in the long run.

Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision if they are interested in the bond market. It neither encourages nor discourages you from investing in any particular asset class or platform.

And quite naturally, everyone wants to know his ‘secret’ to amassing such huge wealth, and the investment ideology behind all of it.

But one thing that the 95-year-old billionaire (who is about to retire this year) has repeated time and again is his dislike towards one particular asset class that the world otherwise loves: Gold. Despite gold’s global appeal as a ‘safe haven’ and its mounting prices this year as well, Warren Buffett has consistently stayed away from the precious yellow metal.

But why? Let’s unfold what the Oracle of Omaha, who sits on a massive net worth of nearly $150 billion, thinks about gold, and why he prefers to stay away from its glitter.

Why gold does not fit into Warren Buffett’s playbook

Warren Buffett is known as a value investor, i.e., an investor who hunts for assets priced lower than their true worth, and thus expects the market to catch up and price them right eventually, which earns him that profit later on.

But for him, gold is an unproductive asset. Unlike stocks, which generate dividends and profits for the investor and have a company behind them that creates some value through the sale of goods and services, Buffett feels that gold just sits idle. The glittery yellow metal doesn’t grow, innovate or even pay the investor back in any way.

And these are not our words.

Warren Buffett had explained it all in his 2011 letter to Berkshire Hathaway’s shareholders.

While talking about a “major category of assets that will never produce anything, but the buyer will still pay more for them in the future”, Buffett pointed towards gold:

“Gold has two significant shortcomings: being neither of much use nor procreative*. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production.*

Meanwhile, if you own one ounce of gold for eternity, you will still own one ounce at its end. What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade, that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.”

Buffett then went on to ask investors to imagine a scenario. 

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge).

Can you imagine an investor with $9.6 trillion selecting pile A over pile B? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A (gold) will compound over the century at a rate far inferior to that achieved by pile B.”

Buffett answers why gold’s price keeps on rising

Reading this detailed explanation by Warren Buffett makes us think – If gold doesn’t generate income and might not be an undervalued asset, why does its price keep rising?

Well, the answer too lies in Warren Buffett’s letter – it’s fear.

People tend to invest in gold because they are concerned about inflation, wars, recessions, and any form of financial meltdown. They actually don’t keep buying gold for what it does as an asset class; they keep buying it in the hope that someone else in the world will be willing to pay more for that gold later on.

Remember, Warren Buffett had mentioned this in his letter?

Through this, he had pointed out that people buy gold because they’re worried or fearful about future factors, such as inflation, market crashes, or crises. Such people also believe that more and more people will keep becoming fearful and hence rush to buy gold, thus pushing up its price.

How has Gold performed vs the stock market?

We compared gold’s 10, 20, and 30-year returns (prices as per 10 grams of 24K gold) with those of India’s Sensex and the US’ NASDAQ Composite.

And the results are contrasting for India and the USA, with gold showing impressive and better returns than the stock market in India over most of the long term, but failing to outperform the US stock market index of the NASDAQ composite in any of the past three decades.

• Gold (India)

(Source for gold prices: https://www.goldpriceindia.com/ , https://groww.in/blog/historical-gold-rates-trend-in-india )

• Sensex

*Sensex levels for the month of November for every time period

(Historical data: https://www.bseindia.com/indices/IndexArchiveData.html)

• Gold (USA)

Source: https://www.usagold.com/daily-gold-price-history/

• NASDAQ

*NASDAQ levels for the month of November for every time period

Source: https://in.investing.com/indices/nasdaq-composite-historical-data

So, comparing Sensex’s returns with India’s gold prices and NASDAQ’s returns with US’ gold prices shows that while the returns from gold have largely outperformed the Sensex over 10 and 20 year periods, India’s stock market index has edged past the glittery gold over the 30 years.

As far as the USA is concerned, the story is totally different. The US’ stock market index, the NASDAQ Composite, has managed to outperform the country’s gold in all three periods: 10, 20, and 30 years.

Why is there a disparity between the India and US markets vs Gold?

The above figures clearly show the disparity between the India and US markets vs gold. But why is it so? Here are the key reasons behind the disparity:

• Explosive tech-driven growth of the US stock market: The last three decades saw the US equity market indices like NASDAQ growing explosively due to huge tech-driven innovation by giants such as Apple, Microsoft, Amazon, NVIDIA, etc. India’s stock market, on the other hand, did not witness such big tech-driven shifts in that period.

Also, although the Indian stock market too has grown significantly in this period, its growth was steadier but across multiple time periods, whereas NASDAQ compounded faster across multiple time periods, as visible from these two charts.

• Rupee depreciation vs the US Dollar: The last three decades have seen the Indian currency of Rupee steadily weaken against the USD-from around ₹31 per USD in 1995 to ₹84-88 in 2025, i.e., a depreciation of as high as 183%. Since gold is globally priced in USD, Indian gold prices rise not just with gold’s global price but also because of the rupee’s depreciation.

• Access to global assets: For the majority of the last 30 years, Indian investors had limited access to global equities or dollar-denominated assets, which is why gold had become the default global asset to hedge against inflation, diversify, and indirectly hold USD value.

In the last three decades, SEBI allowed mutual funds to invest overseas from as recently as 2021, and although the Liberalised Remittance Scheme (LRS) was introduced in 2004, its limit was increased much later during 2015-2021 period, from $25,000 to $2,50,000 per individual per year.

On the other hand, US investors could easily diversify across global stocks, thus reducing their need to depend on gold.

What does Warren Buffett’s portfolio look like?

If Warren Buffett does not invest in gold as an asset class, then where does the world’s 10th richest person actually invest?

Well, as per the publicly available data of his shareholdings through his company Berkshire Hathaway, Buffett has invested in stocks of around 40 companies, with his biggest investments and their valuations being (as of October 2025):

1. Apple: $75.2 billion

2. American Express: $55.9 billion

3. Bank of America: $32.2 billion

4. Coca-Cola Co.: $28.2 billion

5. Chevron Corp: $18.9 billion

Conclusion

Warren Buffett’s logic against gold stems from its lack of productivity. However, the historical performance of gold reveals a different story in various countries.

In the USA, gold’s underperformance against the US stock market index NASDAQ signals why the American billionaire Warren Buffett is not a fan of the glittery metal. Whereas in India, the picture is quite opposite, as gold has proven to give better returns than Sensex in the 10 and 20-year periods, and just marginally missed in outperforming it in the 30 years.

Moreover, we also explained the key reasons behind the disparity between the India and US markets vs gold, right?

So, if you follow Buffett’s strategy, you would end up avoiding gold altogether. But should you do that? Well, not really. Since gold indeed can be a useful hedge against inflation, and its long-term returns, as we showed above, have been mostly in double digits in the USA and even beaten the stock market in countries like India.

Summing it up, even though Warren Buffett is not a fan of gold, you, as an investor, can add some of it to your portfolio and view it as a diversifier beyond the usual stocks.

Please note that this is an opinion blog and not an official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class, deal or platform.

But what if we told you that gone are the days when tapping into real estate meant locking such huge chunks of money into a single land or building?

Thanks to the changing landscape of India’s real estate industry, especially in the last decade or so, you can now invest in real estate with as little as a few hundred or thousand rupees!

Sounds interesting? Well, check out our latest blog as we dig deep to bring to you the list of some alternative ways in which you can invest in real estate beyond the traditional method of putting lakhs or crores of money to buy the physical asset.

1. Real Estate Investment Trusts (REITs) & SM REITs

• REITs

Think of Real estate investment trusts (REITs) like mutual funds, but for real estate – You invest in a REIT, which then invests in commercial properties that generate rental income. REITs give investors access to ownership of high-quality real estate assets in small ticket sizes. They are listed on the stock exchanges and investors can buy REIT units just like they would buy shares of any listed company. REITs manage the portfolios of high-value real estate properties and mortgages.

For instance, they lease properties and collect rent thereon. Then this collected rent gets distributed among shareholders as income and dividends later on.

You can start investing with an amount as low as Rs 100-500 for one unit of the REIT, and can expect returns of around 11%-16%. You can invest through apps such as Zerodha’s Kite, Groww, Smallcase, etc.

(Some REITs listed on Smallcase app, as on 28 October 2025)

As far as taxation is concerned, here’s how REITs are taxed:

• SM REITs

Within the REITs framework, there is an interesting subclass which has been gaining traction in recent years, i.e. SM REITs (Small and Medium Real Estate Investment Trust).

While REITs are designed for large-scale and diversified real estate investments made accessible to retail investors with small ticket sizes at lower risk, SM REITs work a bit differently.

SM REITs target mid-sized assets in emerging markets with higher entry barriers (min investment amount of ₹10 lakh), offering potentially higher yields but with greater concentration risk and lower liquidity. A key aspect is that SM REITs bring the previously unorganized fractional ownership models under SEBI regulation.​

The taxation rules for SM REITs are the same as those of traditional REITs.

India’s market regulator SEBI had introduced SM REITs in March 2024 to formalize and regulate the fractional ownership space, which helps in providing investor protection while unlocking India's vast mid-segment real estate market. You can invest in SM REITs through platforms such as Propertyshare and hBits.

You can also check out the SEBI-registered SM REITs and REITs in India here:

SM REITs: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=48

REITs: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=42

Also, here’s a comparative table to help you further understand the differences between REITs and SM REITs:

2. Infrastructure Investment Trusts (InvITs)

In simple terms, InvITs (Infrastructure Investment Trusts) are similar to specialized or sectoral mutual funds which pool in your money to invest majorly in cash-generating or under-construction infrastructure projects like dams, highways, railway projects, transformers, power grids, etc.

The main objective of InvITs is to open the doors for retail investors to access investment opportunities in infrastructure projects that were previously only available to large institutional investors.

For InvITs specifically, you can invest by buying and selling them in a similar manner to equities, since InvITs are listed on the NSE/BSE, where the units can be traded. You can invest through apps such as Zerodha’s Kite, Groww, Smallcase, etc.

Here’s the list of SEBI-approved InvITs in India: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=20

(Some InvITs listed on Smallcase app, as on 28 October 2025)

There is no minimum set amount to invest in InvITs, and you can start with as low as Rs 60-100 for one unit of the InvIT, and can expect returns of around 8%-15%

3. Fractional Ownership

Through fractional ownership, you can invest in real estate without letting your bank account take a huge hit. As its name suggests, fractional ownership refers to partial ownership of a property, wherein investors pool in their capital to invest in a physical property.

This model offers a middle ground to investors who want to own a share of premium assets like vacation villas, second homes, or pre-leased commercial spaces without having to bear the full and hefty cost of ownership.

So, how does the entire process of fractional real estate (FRE) ownership work? Well, the asset manager (the fractional real estate platform) sets up a separate entity – an SPV (Special Purpose Vehicle) – which is a legal entity that pools in investor's funds. The SPV can be a private limited company or an LLP.

In case the SPV is structured as a private limited company, investors become partial equity and partial debenture holders of this company. based on their investment amount.

On the other hand, in case the SPV is structured as an LLP, investors will become partners in this LLP.

Now, how do you, as an investor, earn returns? Well, in two ways – rental yield and property appreciation.

Firstly, the rental yield being generated from your property is distributed to you (along with other investors) over your entire investment period, in proportion to your original investment. The asset manager (the FRE platform) manages the investment portfolio, legal work, tenants, and property maintenance for a fee based on the overall transaction.

Secondly, at the end of the investment period, the FRE platform sells the property if a good enough opportunity arises, and then your share of profit gets distributed to you as per your investment proportion.

To give you a fair idea, here is an example of a property listed on FRE platform Claravest:

As far as the taxation of rental yields is concerned, it depends upon the type of SPV model:

You can start investing with a minimum amount of Rs 1-10 lakh, and can expect returns around 8%-17%, through FRE platforms such as Claravest and Fracspace.

4. Tokenisation

Another interesting way to tap into the real estate investment market is through the concept of tokenisation. This concept combines fractional real estate investment with modern blockchain technology to offer a new investment opportunity. But how? Well, let's dig deep to explain this to you.

Tokenization in real estate refers to the process of converting ownership or investment rights of a property into digital tokens that exist on a blockchain. Each such digital token represents a fractional share in the property, thus enabling multiple investors to collectively own high-value real estate assets with small minimum investments.

But how does all this happen?

• Firstly, a property is legally held by a Special Purpose Vehicle (SPV), then its total value is divided into a large number of digital tokens (e.g., 10,000 tokens or 1 lakh tokens).

• Each digital token represents a small share of the property, and owning each token gives the investor the right to a portion of whatever the property earns or grows in value. This includes:

-A share of the rental income the property generates (like your fraction of the monthly rent).

-A claim on any increase in the property's market value (appreciation) over time.

-Or direct ownership rights for that fraction of the property itself.

• You, as an investor, can buy multiple tokens on a digital platform (such as RealX).

• These tokens can sometimes be traded on a marketplace, so investors can sell their stake more easily than in traditional property deals.

• Investors get to receive income (like rent or profit from appreciation) in proportion to the number of tokens they hold, with all transactions transparently recorded on blockchain.​

By the way, we had done a deep dive blog separately on tokenized real estate, you can check it out here:

You can start investing with as low as Rs 5,000-50,000 from platforms such as RealX, AltDRX, PropFTX, and Ryzer. Since it's still an emerging and relatively newer alternative investment concept, it's not yet clear how much returns it broadly offers.

5. Real estate debt

Another interesting concept that has largely remained unexplored in India, especially by retail investors, is real estate debt as an asset class.

According to a report by real estate giant JLL-Propstack, India's real estate sector has a debt financing opportunity of around ₹14 lakh crore during the 2024-2026 period.

So what exactly is real estate debt? Simply put, real estate debt as an asset class involves lending money to real estate developers or builders. Such loans are backed by real estate assets, which provides security, thus reducing risk compared to equity investments in real estate.

Investors in real estate debt do not own the property but act as lenders, and receive fixed interest payments. Types of real estate debt investments include construction loans, bridge loans, etc.

Platforms like Earnnest.me are helping individual investors invest in quality, regular-paying real estate debt. However, keep in mind that historically, real estate debt investments have been a high risk category, and the market and economic conditions can also affect these investments, even though the implementation of RERA and IBC regulations a few years ago has led to a significant improvement and discipline.

The minimum investment amount in this asset class is relatively higher, and starts at around Rs 10 lakh, with returns ranging around 14%-16%. But again, keep in mind that this is an emerging and relatively newer alternative investment concept.

6. Real Estate ETFs

Real estate ETFs (Exchange-Traded Funds) track indices or baskets of real estate stocks (such as DLF, Lodha Developers and Godrej Properties) and REITs. They trade on stock exchanges such as BSE and NSE. So, instead of holding individual REIT units or stocks, you own ETF units or a basket of stocks that represent a fractional stake in an entire portfolio of real estate assets.

ETFs offer passive index tracking, and they simply replicate a specific index. For example, Motilal Oswal Nifty Realty ETF works by passively replicating the Nifty Realty Total Return Index. The ETF invests approximately 95% to 100% of its assets in the securities that make up the Nifty Realty Total Returns index, and aim to closely match its returns.

Keep in mind that investing in real estate ETFs carries risks such as interest rate sensitivity, market volatility, and industry concentration. As far as taxation is concerned, their taxation is the same as equity or debt mutual funds, depending on their underlying asset mix and how SEBI classifies them.

ETFs with 65% or more in equity instruments are classified as equity-oritiented ETFs, whereas those with less than 65% investment in equity instruments are classified as non-equity (debt oriented) ETFs.

The dividend is taxed as ‘income from other sources’ at your slab rate. 10% TDS is also applicable if total income exceeds Rs 5,000.

You can start investing with as low as Rs 500- Rs 1,000.

Conclusion

In the end, we all can agree that India’s real estate investment landscape is undergoing a major transformation. Instruments like SM REITs, InvITs, Tokenization and ETFs are unlocking opportunities for retail investors to get a slice of high value income-generating properties that were once out of reach.

Gradually, we are seeing the build up of an ecosystem that blends the stability of real estate with the liquidity and accessibility of financial markets. And with more and more regulatory frameworks coming up from SEBI’s side every year, all these alternative investment options can pave the way for a more inclusive and transparent real estate market in India, where ownership is not limited by capital anymore, and is in fact getting expanded by more and more innovation.

But as we always mention, do weigh the pros and cons of each and every asset class and platform before investing your hard earned money. Go ahead only with the one that suits your risk appetite and investment goals.

Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision if they are interested in real estate debt as an asset class, and neither encourages nor discourages you from investing in any particular asset class or platform.

Well, we at ALT Investor decided to look at aspects that others don’t. So in this blog, we’ll quickly cover the fundamentals of the IPO, the controversies, and then talk about the other side of the story that nobody else is talking about.

Let’s begin.

About the Lenskart IPO

Lenskart’s Rs 7,278 crore IPO is the first pure-play eyewear opportunity in India’s stock market. Here are some basic details about it.

The shares are currently trading in the unlisted markets with a lot of volatility, and the Grey Market Premium (GMP) as of 26 October 2025 was up to INR 120 on certain platforms.

(If you want to know more about the grey market and unlisted shares, read our detailed blog here)

So what’s the controversy around it?

Well, if you know about the controversy, you can skip to the next section. But if you don’t, here’s what the market is saying:

1. Low capital infusion into the company and large exits: Over 70% of the IPO proceeds are going to existing shareholders selling their shares rather than fresh equity being raised by the company.​ This questions the whole premise of “raising money” for the company.

2. High P/E ratio: A big talking point has been the company’s P/E ratio of 230-235x (FY25 profit of Rs 297 crore)​ – considered to be very high P/E compared to typical industry standards of around 15-25 or even up to 40-80 – usually considered for high-growth startups. This means investors need to pay a massive premium for each rupee of current profit, pegged at the expectation of exponential future growth.

3. The profit quality itself: A big criticism centers around Lenskart's FY25 profit of Rs 297 crore. Digging deep into the numbers though, shows a different story altogether:

(source: valueresearch)

Lenskart has mentioned Rs 356 crore as "other income." Let’s break down where this Rs 356 crore other income came from:

• Rs 73 crore came from sale of mutual fund investments

• Rs 58 crore came from redemption of fixed deposits

The remaining, and biggest part of Rs 167 crore is where it gets interesting – In 2022, Lenskart had bought a Japanese company called Owndays for a mammoth amount of $400 million or Rs 3150 crore (as per prevalent exchange rate), including deferred payments. The expected future payment was revalued lower in FY25, thus creating a Rs 167 crore accounting ‘profit’ despite no actual cash flow.

This is what accountants call FVTPL gain (Fair Value Through Profit or Loss), which is a one-time accounting entry. There is no actual cash or business income involved in this.

So, after excluding this one-time gain and the other income, the normalised profit is much lower than what is quoted.

4. Controversy around Bansal’s Pre-IPO share purchase: Just 4 months ago in July 2025, Peyush Bansal had bought 4.26 crore shares from investors like Kedaara Capital, Chiratae Ventures, and Alpha Wave at approximately Rs 52 per share, thus spending Rs 222 crore. Those same shares are now being offered in Lenskart’s IPO at Rs 382-Rs 402 per share, thus representing an unrealized gain of ₹1,495 crore in just 90 days for the CEO.

Which anchor investors have invested? And more importantly, why?

Lenskart had raised Rs 3,268 crore from 147 anchor investors, with bids totaling Rs 68,000 crore, i.e. nearly 10x the issue size.

Participants included:​

• Foreign Institutions such as the Government of Singapore, T Rowe Price, BlackRock, Fidelity, Goldman Sachs, JP Morgan, Nomura and Norway's Government Pension Fund Global​.

• Domestic institutions such as SBI Mutual Fund, HDFC Mutual Fund, Axis Mutual Fund and ICICI Prudential Mutual Fund.

• INR 90 crore pre-IPO investment from billionaire and DMart founder Radhakishan Damani

Now, if the industry is saying that the IPO is questionable, why have these anchor investors invested in it?

Well, there are a few typical reasons (and one bitter truth/theory). Let’s look at the typical ones first:

1. Strategic diversification: Funds often take small initial allocations (e.g., 0.1-0.2% of AUM) across high-growth consumer tech plays to capture any upside if the company scales further

2. Brand leadership and growth: Lenskart is India’s largest branded eyewear retailer, growing its offline and online presence rapidly, which appeals to funds seeking exposure to scalable consumer brands

3. Limited risk due to small allocation: Most mutual funds have made minimal allocation, positioning this more as an “optionality bet” rather than a core portfolio holding.

Now, the dark theory (or truth).

Some experts say that the reason such leading AMCs tend to invest in such high valuation IPOs, is because of the fear of merchant bankers not giving them allocation to other IPOs in future. If that’s truly the case, we have a big problem in the industry – something that SEBI must look at.

Now, the hottest question – Is the P/E ratio really a big problem?

With Lenskart’s 230 P/E ratio being a hot topic of debate amidst ongoing IPO, we want to explicitly cover this piece.

So we checked the P/E ratios of some of its listed competitors/peers – global as well as Indian:

Glancing over the P/E ratios of some of the largest listed eyewear companies around the world shows that they have low ratios in comparison to Lenskart.

But let’s also look at the other side of the debate.

We picked some of the most hyped startups that went for an IPO, that had really high P/Es. We saw the journey of their share price to determine whether they created investor wealth or not.

Let’s look at them one-by-one.

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Zomato (Eternal Ltd)

This one is by far the winner of high valuations.

Zomato’s IPO was a huge buzz in India’s startup ecosystem getting listed at a price of Rs 116 compared to its price band of Rs 72-Rs 76. The listing price turned out to be higher than the unlisted share market’s GMP of Rs 8-17 at that time.

Back then, Zomato was sitting on a huge loss of Rs 1222 crores in its IPO year of FY21-22. A year after the IPO, its losses dropped to Rs 971 crore in FY23.

Then came its first ever profitable year of FY24, when Zomato recorded a profit of Rs 351 crores.

Zomato’s P/E ratio currently stands at a mammoth number of close to 1600! And why is that? Because its growth has been massive, with the company almost doubling its revenue just in Q2 of FY 26.

Eternal Ltd is a classic example of a company that has provided significant returns to investors, with its stock giving an impressive CAGR of 71% in the last 3 years. In spite of its skyrocketing PE.

Nykaa

Soon after Zomato tasted success in its IPO, Nykaa (FSN E-Commerce Ventures) went on to taste bigger success. It raised around Rs 5,350 crore, which included a fresh issue of only Rs 630 crores, with remaining being an OFS of about Rs 4,720 crore by existing shareholders.​

Nykaa’s IPO issue price band was set at Rs 1085- Rs 1125 per share, and the stock had closed at Rs 2,206 on listing date, delivering a listing gain of around 95%.​

In the grey market, Nykaa’s unlisted shares were trading around Rs 1,775- Rs 1,800 per share, roughly 60-70% above the then-offer price of Rs 1085- Rs 1125. This strong grey market premium which had indicated robust investor interest ahead of the IPO turned out to be right, as the listing went on to be successful.

As far as its P/E ratio is concerned, it was at 291 when it went for IPO in November 2021. Yes, higher than Lenskart’s 230.

Nykaa’s P/E right now? 880.

(Note that Nykaa had announced a bonus issue in the 5:1 ratio in the year 2022, which is why its share price got split).

In its IPO year of 2021, Nykaa was already a profitable company. Nykaa’s profit in FY2021-22 was Rs 41 crores, and it rose to Rs 72 crores in FY25.

Although Nykaa’s shares fell after the IPO, in the last 3 years, they’ve given a moderate CAGR of 10.5%.

So Nykaa’s case has shown that while it was profitable when it went for IPO and got a successful listing too, but its stock has dived and has only recently started giving moderate returns. And yet, it’s PE stays at 880.

Paytm

Another IPO that had created huge buzz in the same year of Nykaa and Zomato, was Paytm. The price band was Rs 2,080-Rs 2,150 per share, and the total IPO size of Rs 18,300 crore, out of which Rs 8,300 crore was fresh issue and Rs 10,000 crore was OFS (offer for sale).

Paytm’s grey market story is one to tell. In the week wherein its listing was scheduled on November 18th, 2021, Paytm’s grey market premium had nosedived from Rs 150 to Rs 30 in just a handful of days. So just a day before listing (i.e. on 17th November 2021), Paytm’s unlisted shares were trading at Rs 2,180, down from Rs. 2,300 just a few days before that.

Paytm’s P/E ratio at present stands at 282. Again, higher than Lenskart.

In the IPO year of 2021 (FY2021-22), Paytm had a loss of Rs 2397 crore, but it has been able to narrow it down year by year, standing at Rs 663 crore in FY25. But finally in Q1 of ongoing FY26, Paytm managed to become profitable, which is why its stock had shown some improvement since July 2025 once the quarterly results came out.

Paytm’s case was worse than Nykaa, share went on to get listed at Rs 1950 (NSE) and then took a nosedive. However, in the last 3 years, the stock is bouncing back, with a CAGR of 26% and a P/E of 282

Ixigo

While many big IPOs had come up in 2021, the next startup that we deep dived into, became public just last year.

Travel booking app Ixigo (listed under parent name Le Travenues Technology) IPO’ed in June 2024. The price band was Rs 88-93, but Ixigo went on to make an impressive debut on the NSE when it closed the listing day at Rs 165.

Ahead of its listing in June 2024, Ixigo’s unlisted shares traded at a GMP of around Rs 29-Rs 30 in the grey market.

As far as financials are concerned, Ixigo was not only profitable in its IPO year of FY25 (2024-25), but also in the years FY21, FY22, FY23 and FY24 as well. Ixigo’s profit in its IPO year of FY25 was Rs 63.4 crores and its P/E ratio was 81.55 in June 2024.

As far as returns are concerned, while it's been just about 1.5 years since it went public, Ixigo has already given 36.41% CAGR in this period.

PB Fintech

PB Fintech’s IPO took place in November 2021. The price band was set between Rs 940 and Rs 980, and it got listed at Rs 1,150.

In the grey market, its unlisted share prices had been on a rollercoaster in November 2021. Ahead of the IPO week, PB Fintech’s GMP ranged widely between Rs 40-Rs 150, and was around Rs 55 mark a day before the listing was done, signalling a negative trend in grey market investor enthusiasm. But the stock ultimately listed around 17% above the price band.

At the time of its IPO (FY21-22), PB Fintech was doing a loss of Rs 832 crores. The fintech company managed to get profitable in FY24 when its profit hit Rs 64 crores and then jumped to Rs 353 crores in FY25. Its P/E ratio stands at 178 today**.**

As far as returns to investors are concerned, the stock has delivered an impressive CAGR of 68% in the last 3 years, with a high P/E ratio of 178.

Lenskart’s listing day sees a rollercoaster ride

AFter witnessing a lot of buzz around its IPO and then an oversubscription of 28 times overall after investors placed bids for 281.88 crore shares against the 9.97 crore shares on offer, Lenskart’s much-anticipated debut on the stock market began with the shares opening at a 3% discount to the issue price on 10th November 2025. The stock debuted at Rs 390 on the BSE and Rs 395 on the NSE against the issue price of Rs 402.

But then in the following hours, Lenskart’s stock began to go up to as high as Rs 413.75 (on NSE) and Rs 413.80 (on BSE), but it eventually dropped again and closed its listing day at Rs 404.55 on NSE and Rs 403.3 on BSE, just a notch above the IPO issue price.

So what’s the deal with Lenskart’s high valuation?

Well, we just saw a bunch of startups give decent returns to investors, during and post listing, with way higher valuations than Lenskart.

Look, while Lenskart’s profit numbers definitely need to be reviewed, startup valuations have historically been crazy in India. Now, we’re not saying whether this is good or bad. But it is what it is.

Maybe the way to value startups is different from traditional companies. Or maybe this is a bubble waiting to burst. Only time will tell. But screaming over valuations based on P/E for Lenskart, when other startups have gone the same way, needs further introspection.

If you’re someone who doesn’t want to get into this startup IPO frenzy, there are plenty of stable, profitable companies that have given better returns than the startups we saw. ICICI Bank, for example – a stable large cap company with solid fundamentals, has given a 14% CAGR in the same 3-year period as above.

Boring companies or exciting startups – it’s your call to make. All we’re trying to say is, don’t just decide to invest in, or dismiss, an opportunity based on 2-3 parameters that influencers are talking about. Take an informed call.

Please note that this is an opinion blog and not an official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class, deal or platform.

Unlike stocks listed on the NSE or BSE, these shares trade in a more private, less regulated environment- which gives early investors a chance to grab ownership stakes before the ‘high-profile IPOs’.

However, while the potential gains from unlisted shares can be exciting, understanding how this market works is what holds the key to making smart and informed decisions.

So before you dip your feet into this side of the investment world, let us understand this entire concept of unlisted shares, the risks, returns, liquidity, etc through this detailed blog of ours.

What are unlisted shares?

As their name suggests, unlisted shares are shares of a company which is not yet listed on stock exchanges such as BSE and NSE. The term is often interchangeably used with ’pre-IPO shares’. Unlisted shares are a form of alternative investment option, and they generally come into the limelight ahead of a company’s IPO.

Where are unlisted shares traded?

Unlisted shares are traded in something known as the grey market,which is an unregulated, parallel market that operates outside the regulated stock exchanges.​

Since these shares are not listed on NSE/BSE yet, transactions happen via intermediaries/brokers specializing in unlisted shares. Platforms such as Incred Money, Stockify, Wealth Wisdom and Unlisted Zone, among others offer investment in unlisted stocks.

Now, before we deep dive into the grey market, it's important to have a clear understanding about the difference between listed and unlisted shares.

Now let us come back to the deep dive we were doing on unlisted shares, and understand what happens in the grey market.

What happens in the unlisted grey market ahead of a company’s IPO?

The grey market for a particular stock tends to become very active once a company announces its IPO price band, i.e. typically around two weeks before the actual IPO subscription begins; and the trading continues until a day or two before official listing on NSE or BSE.

The participants include:

• Early investors such as employees with ESOPs, and venture capitalists who want to sell their shares

• Speculators (buyers) who are aiming to buy shares with the expectation of fetching higher prices after listing

• Grey market brokers or dealers who facilitate these unofficial trades​

Ways to invest in the grey market of unlisted shares

As a retail investor in India, first you need to select a way of investing in unlisted shares. Some of the popular methods to do so include:

1. Through registered unlisted share brokers and platforms such as Incred Money, Stockify, Wealth Wisdom and Unlisted Zone. On such platforms you can select the unlisted share in which you want to invest, and then place an order through the platform. Once you make the payment, the unlisted shares are transferred into your demat account.

2. Through direct deals with existing shareholders of a company, such as existing employees, founders or early investors who are now willing to liquidate before the IPO. However, this route typically requires a broker/intermediary to facilitate documentation and transfer.

3. Through private placements, venture capital or angel investors. These are usually targeted at HNIs, venture funds, or through wealth management firms.

Coming back to the most popular way amongst these for retail investors, i.e. investment through platforms and brokers. Here you need to understand one key terminology before investing in grey market for unlisted shares:

Look at all these headlines first.

What is the common term being used in all these headlines? It is the GMP (Grey Market Premium).

What is GMP and why is it important?

GMP is the extra amount investors are willing to pay for a company’s shares before its Initial Public Offering (IPO) officially lists on the stock exchange. It acts as an informal indicator of expected listing gains.

If the market sentiment is positive and demand is high, the GMP goes up (indicating investor sentiment that it will list at a premium). On the other hand, if it’s low, the premium drops or turns into a discount. The price agreed upon is what turns out to be the IPO grey market premium (GMP).

GMP= Grey market price - Official issue price

For example: If a company’s IPO issue price as per its price band has been set at Rs 100 and its shares are trading at Rs 150 in the grey market, then the GMP comes out to be Rs 50 (Rs 150-Rs 100), implying that the investors expect the stock to list around the Rs 150 mark and hence expect around 50% listing gain when the company goes public.

Now you may wonder why the GMP is important? Well, the GMP acts as an indicator of investor interest and can help estimate possible listing performance. It also influences retail participation in the upcoming IPO of the company ahead of the three-day window when the official subscription opens.​

However, keep in mind that the GMP is based on the unofficial price and is speculative, so the actual listing price may differ based on market volatility, sentiment, or fundamentals, making investor research imperative before deciding to invest in unlisted shares.

Next, let’s talk about the difference in the share price before listing (i.e. in the grey market) and after listing (i.e. after the IPO), why the mismatch happens.

Pre-IPO vs Post-IPO Price Dynamics-Some Hits & Some Misses

Let us first look at the unlisted vs listed share price of some companies whose shares were traded in the grey market and later saw a dynamic shift in the price once they got listed post the IPO.

What happens to unlisted shares after the company goes for IPO?

Firstly, as the above table shows, when the listing price post-IPO turns out to be higher than what investors paid for the unlisted share price, then it's a profit for them. On the other hand, if the listing price turns out to be lower, then it's a disappointing loss.

But, but, but, a gain or loss does not realize until you sell the share. So, irrespective of the listing day price, you, as a holder of unlisted shares of a company, can anyway not sell them immediately after IPO and listing, since their is a mandatory lock-in period of six months. After the IPO takes place, those unlisted shares get converted into listed shares, and once the six month lock-in period ends, these can be sold on the stock exchange.

Why do such mismatches occur between the listed and unlisted share price?

The above mentioned cases (in the table) show how often there is a mismatch in the unlisted share price of a company vs the price upon listing. It can either be a bumper listing day profit or a disappointing loss for the pre-IPO investors.

But why does this mismatch happen?

There are multiple factors contributing to it:

1. Sentiments v/s Fundamentals: Unlisted shares trade in the grey market through informal broker networks and limited participants. In such scenarios, the trading and price quotations ride on sentiments and expectations, and are more of a speculative nature rather than being based on fundamentals. That is why the post IPO listing turns out to be different from the sentiment driven pricing that took place in the grey market amid the hype.

2. Information asymmetry: When a company is going for IPO, it has to get its DRHP approved by SEBI. The DRHP contains all the financial information about the IPO-bound company. But in case of grey market participants trading in unlisted shares of a company, they tend to not get full access to the company’s past history and financials until it files the DRHP. This is because unlisted companies are not legally bound to release quarterly results or audit reports. Moreover, even if they get access to the regulatory filings, credit ratings etc ahead of the IPO, such late discoveries can lead to abrupt shifts in market sentiment and thus affect the pricing.

3. Changing market conditions: Changing market scenarios/conditions between the grey market trading period and the IPO listing date can also affect the prices. Global policy changes such as US Fed announcements or geopolitical events can rapidly alter equity sentiment, whereas domestic economic changes such as the RBI MPC meeting or the government's budget announcement can swing investor mood within a few days.

How are unlisted shares taxed?

Capital Gains Taxation:

Short-Term Capital Gains (STCG): Shares held for ≤ 24 months: Taxed at income tax slab rate.

Long-Term Capital Gains (LTCG): Shares held for > 24 months: Taxed flat at 12.5% without indexation.

Dividend Income:

Dividends from unlisted shares are taxed as ‘Income from Other Sources’ at applicable slab rates. TDS is deducted at 10% if dividend income exceeds ₹10,000 annually.

5 risks you should not ignore before investing in unlisted shares

Before putting your hard earned money into unlisted shares of a company, it's extremely important to understand this long list of risks:

1. Liquidity Risk: A major challenge with unlisted shares is that they are harder to sell, as finding buyers/sellers is not easy due to relatively fewer participants in the grey market. This can take days or even months, depending on the demand-supply economics of the stock, which is why investors may be unable to liquidate shares when needed.

2. Regulatory Risk: SEBI had issued a warning circular in December 2024 wherein it cautioned investors to not engage with and undertake investment and trading activities through un-registered online platforms or apps which are facilitating transactions in unlisted securities (shares). You can read the detailed circular here.

And as recently as in October 2025, India's market regulator issued another warning against unlisted shares. SEBI has reportedly told mutual funds that they cannot invest in companies before they list, i.e. barring them from investing in unlisted securities.

This comes as a clarification for certain mutual funds which had sought clarifications from SEBI as to whether pre-IPO placements qualify as eligible investments. But India’s market regulator said only investments during the official IPO process are allowed, including large, early-stage anchor investments. So, SEBI has given this strict reminder to certain mutual funds who seemed to be inching towards the ‘lucrative’ grey market for unlisted securities.

3. Price Manipulation Risk: As the unlisted share’s price is set by the involved sellers and dealers and are tied to a lot of speculations and insider trading, there is no clear price discovery and high scope of manipulation. The prices can vary widely across different platforms and brokers. On the other hand, it is very hard to manipulate listed shares because of the transparent nature of trading and presence of regulatory protection.

A recent example of price manipulation is trading of Lenskart in the unlisted market.

Ahead of its much anticipated IPO, we checked Lenskart share price in the unlisted market through a few platforms, and you can clearly see the discrepancy in prices across different platforms:

4. Financial Transparency Risk: While IPO-bound companies need to compulsorily disclose all the relevant financial information in the DHRP and other filings to the SEBI, there is no such mandate for unlisted companies. They are not legally bound to release quarterly results until they announce IPO plans, and their financial reports can be delayed by up to multiple months or even years, which is a clear lack of transparency in disclosure of financials.

For example, as of October 2025, Byju's has not publicly released its official, audited financial reports for FY23 and FY24 yet. The publicly available last financial report by them (for FY22) was released after a delay of nearly two years, in 2024.

5. Lock-in Period Risk: Once a company goes public after the IPO, investors holding unlisted shares are typically subject to a mandatory lock-in period of 6 months. During this period you cannot sell your unlisted shares, hence restricting your ability to exit during the initial listing phase.

What does this grey market reveal about investor behaviour?

History shows that the high potential of returns attracts many investors to go ahead and dip their feet into the grey market for investing in unlisted shares. But why do they do so despite knowing the presence of so many risks?

Well, as far as what we have understood about investor behaviour, the following become the driving factors for investors to invest in unlisted shares of the grey market:

• Investors are drawn towards the grey market for early access/entry into the promising companies before their IPO. They hope to capture substantial listing gains and potentially high returns compared to post-IPO investing.​

• Even though grey market prices are only reflective of strong investor sentiment based mostly on hype or buzz rather than verified fundamentals, retail investors tend to extrapolate positive news or brand value, which reflects in the GMP (grey market premium).

• The interest and participation in the grey market also shows investors’ willingness to accept higher risk of illiquidity, lack of transparency, and valuation uncertainty, in a bid to diversify their portfolio with high growth potential companies that are not yet listed.

• There is a common misconception that before a company lists, one can invest in its shares for a cheaper price. In reality, that’s not how it works. But that’s the notion that a lot of retail investors have.

Overall, the grey market reveals a mix of optimism, speculative behavior, and risk-taking appetite for investors, highlighting both opportunities and caution for investors in India's unlisted share ecosystem.

Is it illegal to invest in unlisted shares through platforms in India?

For you, as an investor, it is not actually illegal to invest in unlisted shares.

Transfer of unlisted shares between known parties is not illegal, as per SEBI, but on the other hand, apps or platforms that act like a public marketplace and facilitate broader level of trading or public offers in unlisted public-company securities without SEBI’s authorisation are treated as violation of the law, according to SCRA (Securities Contracts (Regulation) Act, 1956 and SEBI Act, 1992.

As per the latter’s Section 12(1) "No stock broker... or such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board".

This implies that brokers or platforms facilitating unlisted share transactions potentially fall under "such other intermediaries associated with the securities market" and would require SEBI registration, which they currently don't have.

So if you, as an investor, still decide to go ahead to transact with such unathorized brokers or platforms, there is no investor protection, grievance redressal or compensation in case any form of scam or fraud happens.

How can you invest in unlisted shares?

If you are interested in investing in unlisted shares, then don’t worry, it’s not rocket science. The only key thing to remember is to choose a trusted and genuine platform as the unlisted share space is unregulated and does not come under the purview of SEBI.

Here’s our detailed blog on how to invest in unlisted shares: https://blog.thealtinvestor.in/navigating-the-world-of-unlisted-shares-and-grey-markets

SEBI’s big announcement on the launch of pre-IPO trading platform

Just a couple of months ago, India’s market regulator SEBI’s chairman Tuhin Kanta Pandey had floated the idea of piloting a regulated pre-IPO trading platform in India. The platform, which would allow trading in the short window between allotment and listing, is expected to test to what extent India’s thriving grey market can be drawn into the regulatory system.

From unlisted company’s price discovery, disclosure norms, to the way investors approach IPOs, the proposed pre-IPO trading platform would demand a shift in more ways than one, but the main aim behind this move by SEBI is to reduce the mismatch between high pre-ipo premiums of unlisted shares and the post-listing performance which kills the hype.

As of now, we need to wait and watch to see when the launch of this pilot project for a pre-IPO trading platform takes place, and what role it turns out to play in this ecosystem.

Conclusion

By now I am sure you must have understood at least one thing pretty clearly. Unlisted shares may seem like a shortcut to earn some big bucks, but they’re a game of very high risk and low liquidity.

While the potential upside can be tempting for many investors, the lack of transparency, regulation, and exit options make them a risky bet. Until SEBI comes up with some regulations for this space, investors must tread carefully on this path.

Please note that this is an opinion blog and not official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class, deal or platform.

But did you know you can also invest in these companies from the comfort of your home in India? While these powerhouse stocks aren’t listed on NSE or BSE, Indian investors can still access the stocks of these billion, or even trillion dollar US companies.

Wondering how? Well, while there are a lot of platforms, some of the popular ones are INDmoney, Vested Finance and Fi Money.  

But before we deep dive into the comparison of these platforms, let us first help you understand how investing in US stocks from India works, the risks, benefits, etc.

How You Can Tap Into The US Stock Market From India

While there are multiple ways to invest in the US stock market from India, we have explained the key ones in brief for your understanding:

1. Direct Investing through US stock investment platforms

You can start investing through platforms like Fi Money, INDmoney, Vested Finance as they enable direct investment in US stocks, mutual funds and ETFs (we’ll dig deeper into these platforms later in this article). From currency conversion to tax documentation and regulatory compliance- these platforms handle most tasks on their end only.

2. International brokerage accounts

Another way to invest in US stocks from India is by opening an account directly with global or US-based brokers like Charles Schwab, Fidelity, and others. These brokers give India’s investors direct access to US stock exchanges and other global markets, wherein you can trade US stocks, ETFs, options, futures, etc.

However, higher degree of paperwork, regulatory compliance, and tax reporting responsibilities can make this a complex way of investment for some investors. Even the fees/charges and minimum investment amount can be higher than domestic platforms. All this makes this mode of investment more suitable for experienced and active investors as well as HNIs with bulk of capital to invest in.

3. Mutual Funds & ETFs

One more way to tap into the US stock market is by simply investing in Indian mutual funds or ETFs that invest in US equities. This way you can diversify your portfolio without dealing with foreign exchange or direct stock picking tasks. This method is suitable for passive investors wanting US equity exposure indirectly without investing into the stocks directly.

4. GIFT City

Located in Gujarat, GIFT City (Gujarat International Finance Tec-City) is becoming India’s offshore financial hub along the lines of international offshore destinations like Singapore, Dubai, etc. Currently there are two ways to invest in US stocks via GIFT City, one is India INX’s Global Access and the second is NSE-IX US stocks UDRs.

India INX Global Access is BSE's subsidiary platform that functions like a stock exchange that partners with US brokers. So basically it acts as a connection point and not a director broker who helps you buy from a US stock market.

Once you open an account with India INX, they go on to open a corresponding account for you with a partnered US broker. The platform (India INX) handles all foreign paperwork and account setup.

The other route is NSE-IX UDRs, which is a subsidiary of NSE. NSE International Exchange creates UDRs (Unsponsored Depository Receipts). An Unsponsored Depository Receipt is a negotiable certificate issued by a depositary bank that represents shares in a foreign company, without the involvement or consent of the company itself. These securities typically trade over-the-counter and do not grant investors shareholder rights such as voting or direct company benefits

Simply put, when you buy a UDR on NSE-IX, a custodian (such as HDFC Bank’s branch at GIFT City) holds the real US shares via their partner, such as Deutsche Bank in the US. You get UDRs credited to your demat account in India, representing your indirect ownership of those US shares.​

Taxation Of Capital Gains Earned From US Stocks

-Capital gains taxation

Taxation for the capital gains you earn from investment in US stocks is no rocket science. For long term capital gains (holding period of more than 2 years), the tax rate is 12.5% (without indexation). Note that the exemption for gains of up to Rs 1.25 lakh in a financial year is not available for US stocks, as Section 112A of the Income Tax Act applies this exemption only to stocks listed on a recognised stock exchange in India.

As far as short term capital gains are concerned (holding period of up to 2 years), the tax is as per your applicable income tax slab.

-Dividend income taxation

Coming to the dividend income from a US stock, it is subject to withholding tax of 25% which the American company deducts on one's dividend payout. And in India, that dividend is included as ‘income from other sources’ and then taxed as per your applicable tax slab.

However, to prevent this double taxation for the investor, the ‘Double Taxation Avoidance Agreement’ (DTAA) was signed between the US and India, as per which you, as an investor in India, can claim an FTC (Foreign Tax Credit) for the tax already paid in the US. FTC shall be lower of the tax payable on such income under the Indian tax laws and the foreign tax paid.

All you need to do is fill the ‘Form 67’ with the Indian tax department before the due date of filing the ITR.

Why You Should Consider Investing In US Stocks?

• Investing in US stocks gives your portfolio an added layer of geographical and sectoral diversification.

• Investing in the US stock market allows you to do fractional investing, which at present is not available in India. Through fractional shares, you can invest in a portion of a stock that is less than one full share, thus making expensive stocks more accessible through smaller investments.

• As per a report by TheHinduBusinessLine, quoting Bloomberg, US and Indian markets have tended to show low correlation in recent years. So, when Indian markets face downturns, US investments may perform differently, which can provide a much needed stability to your portfolio and reduce overall risk.

• US stocks also give you access to world's leading tech companies like Apple, Microsoft, Tesla, Amazon, thus offering a sectoral diversification to your portfolio, especially if that sector is not available or growing in India.

• The mature nature of the US economy vs India's emerging market dynamics opens the gate to access different economic cycles for Indian investors.

Two Key Risks You Must Know Before Jumping Into The US Stock Market

Currency Risk

The fluctuations in INR-USD can significantly impact your returns, even if US stocks are performing well.

For example, you invested Rs 4 lakh when \(1 = Rs 75, thus buying \)5,333 worth of stocks. Now, if the stock gains 10% in USD, your holding becomes $5,866. But if Indian Rupee strengthens to say, Rs 65 per USD, your Rs 4 lakh investment becomes Rs 3,81,290 (turning your investment into a loss despite stock gaining 10%)

On the other hand, if INR weakens to say, Rs 85 per USD, your investment gains get amplified to Rs 4,98,610.

Speaking of Rupee, the Indian currency is expected to strengthen in this last quarter of 2025, with Bank of America and Nomura predicting the Rupee to climb up to Rs 84 per dollar, vs the current rate hovering around the Rs 88 per dollar mark. So, if this does come out to be true and the Indian currency strengthens in coming months this year, investors in India may see a lower return on the money invested in US stocks.

Regulatory and Political Risks

Any form of tax law changes, trade restrictions or financial regulatory changes by the US government can affect a company’s profitability, stock prices, etc. Moreover, if there is election uncertainty, govt shutdowns, trade wars, or policy shifts, your exposure to the US stock market can make your portfolio see volatility in such scenarios.

Take the example of what has been happening in recent months. Under President Trump, US tariffs have had a significant and multifaceted impact on the US economy as well as its stock market.

Trump’s announcement of sweeping ‘reciprocal tariffs’ was aimed at reducing the trade deficit, reviving US industries, and generating revenue. But some research reports have indicated that tariffs have actually slowed US GDP growth in 2025 and further slowdown is expected in 2026.

As far as the American stock market is concerned, the major tariff announcement in early April had triggered a rapid market crash, with major US indices like the S&P 500, Dow Jones, and NASDAQ experiencing their worst single-day decline since the COVID-19 pandemic crash of 2020.

(Source: US Bank report)

While the stock market has been able to rebound in following months and even reached record highs recently, volatility has still remained elevated.

https://blog.thealtinvestor.in/explained-the-impact-of-trump-tariffs-on-bond-yields-in-the-us-and-india

If you are interested in exploring investment in US stocks from India, here’s an in-depth comparison of three of the popular platforms to help you decide in a wiser manner.

1. INDmoney

After previously laying the foundation of redBus and Goibibo, Ashish Kashyap had founded INDmoney in 2019. From investment in NPS, IPOs, mutual funds, F&Os, Indian and US stocks to UPI and credit card payments, INDmoney acts as a super app for its users.

Key Features

• An ‘all in one’ app with comprehensive view of all financial assets

• Investment options include US stocks, mutual funds, FDs, and bonds

• Fractional investing in shares available with minimum investment of $1

• Offers direct access through NSE-IX GIFT City accounts (IFSCA regulated), and global access through US broker accounts (SEC/FINRA regulated).

• US broker partners include DriveWealth LLC and Alpaca Securities LLC

• Follows regulatory compliance through IFSCA-regulated for GIFT City operations, SEC oversight for US operations

Fees & Charges for investing in US stocks

• Account Opening: No charges

• Account Maintenance: No charges

• Brokerage: 0.25% per transaction (Maximum $25, in case of global access and not direct access)

2. Fi Money

Founded in 2019 by two ex-Google employees Sujith Narayanan and Sumit Gwalani, Fi Money was created as a digital banking platform for professionals, and it operates under epiFi Wealth Private Limited. Sujith had previously worked at Standard Chartered Bank and Religare Macquarie Private Wealth as well. Fi has evolved to become a money management app that offers services such as credit card, FDs, EPF tracking, US stocks, mutual funds, etc.

Key Features

• Start investing at as low as ₹100

• Curated collections of pre-built portfolios like ‘Warren Buffett's portfolio’

• Seamless account integration with Fi savings account

• Uses US-broker (Alpaca) which is regulated in the US.

Fees & Charges for investing in US stocks

• Account Opening: Free

• Brokerage: Zero commission on US stocks and ETFs

• Account Maintenance: Zero charges

Note that Fi Money had begun winding down its operations as per the communication (emails) received by its customers around 11th March 2026.

3. Vested Finance

Vested Finance was founded in 2018 by Viram Shah and Darwin Arifin, though the latter had left the company in October 2023. Unlike INDmoney and Fi money which are more of ‘all in one’ super apps, Vested is more focused on helping you diversify your portfolio through US stocks, ETFs and global mutual funds (available on both website and app).

Key Features

• Offers theme-based portfolios (‘Vests’), which are curated baskets of stocks, such as AI vest, SpaceTech vest, EV vest, etc.

• Also offers some private markets access to get early access to high-growth companies before they go public.

• Can start investing at as low as $1

• The US broker partner is VF Securities, Inc. (member FINRA/SIPC), and investments custodised with DriveWealth

• Follows regulatory compliance as a registered investment adviser with US SEC, regulated for remittances in India under RBI's LRS scheme.

Fees & Charges for investing in US stocks

• Account Opening: Free

• Account Maintenance: No annual/maintenance charges

• Brokerage: Zero commission on US stocks and ETFs; some ETFs may have a small transaction fee

A Quick Comparison Of Vested Finance vs Fi Money vs INDmoney

Conclusion

Investing in US stocks from India has become increasingly accessible through platforms like INDmoney, Vested Finance, and Fi Money. And the continuously evolving GIFT City is becoming a big financial hub of its own, thus opening more and more doors for our stock market to go global.

Each of the 3 platforms offers unique features and benefits aimed to cater to different investor needs. You should consider factors such as fees, investment options, and user experience to find the best fit for your investment goals.

As per us, INDmoney seems suitable for investors who want an all-in-one app to manage both Indian and US investments, track financial assets, and access a broad set of financial products. So it’s ideal for those seeking convenience and holistic money management.

On the other hand, Vested Finance seems most suitable for investors focused on US markets who value curated, theme-based portfolios, global ETFs, and a platform built solely for international diversification. So it’s great for those who want to actively build a US/global portfolio.

As far as Fi Money is concerned, it can suit cost-conscious beginners or professionals looking for seamless, no-brokerage US stock investing with easy integration to banking and money management. So it can work well for those starting small or preferring a simplified experience. Note that Fi Money had begun winding down its operations as per the communication (emails) received by its customers around 11th March 2026.

Last but not the least, remember that although US stocks enable you to tap into a unique opportunity to diversify your portfolio geographically and sectorally, and provide exposure to some of the world's leading companies and economic cycles, do not forget to consider factors such as currency risk, regulatory changes, and political risks that can impact your investments.

Please note that this is an opinion blog and not official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class, deal or platform.

We spoke to Tarun Bahri, the co-founder and CEO of investment platform The Policy Exchange, and they do something that’s conceptually very interesting- they help investors get insurance policies transferred to them (also known as assignment) from policyholders who do not wish to continue their policies, or are in need of money.

This means:

• The policyholder transfers their insurance policy to an investor, and gets an amount (called as surrender value) up front, before the policy matures

• The investor gets the policy transferred at a discount and gets the maturity value on the date of maturity, earning them an 8-12% return

• The original policyholder still retains partial life cover as the policy stays active, with future premiums (if any) paid by the investor

Let’s do a deep dive on this business model and the company, and talk about the pros and cons of the platform.

About The Policy Exchange

The Policy Exchange, operated by Fairvalue Insuretech Pvt. Ltd. (CIN: U72900HR2022PTC105640), founded in 2022, facilitates a three-way collaboration hub, connecting

• policyholders seeking liquidity

• investors seeking assured returns, and

• insurance companies wanting to improve policy persistency

  Founding team:

• Co-Founder & CEO: Tarun Bahri – 27+ years of experience, with more than 16 years in insurance, 11 years in banking, formerly with Max Life Insurance, Citibank, HDFC Bank, and ABN Amro Bank

• Co-Founder & Director: Naveen – 25+ years in consumer banking & telecom, formerly with Bharti Airtel, SBI Cards, Citibank.

• Co-Founder & Director: Safia – 25+ years in telecom & social sector, formerly with Koshika Telecom, Global Telesystems, Bharti Airtel.

The founding team has rich industry experience, though specific track records in fintech or investment management are not clearly established.

According to Tarun, The Policy Exchange has enabled investments of INR 100 crores till date, with 2,000 investors and more than 20,000 policyholders.

The problem

The founders identified a problem that affects 3 stakeholders – policyholders, insurance companies and insurance agents.

The thing is, some policyholders are unable to continue their policy in financially difficult times. Most of them end up discontinuing the policy and surrender it to the insurance company (in return for the sum of money called the “surrender value”). This not only means end of life cover for the individual, but also translates to a business loss for both – the insurance company and the insurance agent.

The solution

The Policy Exchange aims to address the above challenge by building a bridge between policyholders in need of liquidity, and investors seeking stable, short to medium-term opportunities.

Through the platform, a policyholder can assign/transfer their policy to an investor, who pays them the surrender value (instead of the insurance company) and takes care of all future premiums (if any). In return, the investor secures the policy’s full maturity amount. This arrangement:

• lets the policyholder unlock its monetary value while keeping their life protection partially intact (more on that later)

• gives the investor a decent return opportunity with relatively low risk, and

• keeps insurers and agents happy with policies staying active Seems like a win-win arrangement for all parties here.

The process

Here’s how the whole process of pre-owned policy investment works:

1. The policyholder approaches The Policy Exchange to assign his/her policy

2. The Policy Exchange lists the policy on their platform, along with the indicative return for the investor, based on their internal calculation

3. Investor pays an amount (equal to surrender value) to the policyholder (and pays future premiums, if any, going forward)

4. On maturity, the investor gets the maturity value back

5. In case of the original policyholder’s demise prior to maturity, the respective insurance company facilitates & handles payouts :

   1. The investor receives the committed IRR for the invested period.

   2. The remaining surplus is credited to the nominee of the original policyholder.

Let’s take an example:

If you login as an investor on www.thepolicyexchange.com, you can see the below insurance policies for investment.

Let’s pick the first one and dive deeper:

• You pay INR 78,897 to the policyholder at the time of purchasing the policy. Since there are no premiums left to be paid, this is the only investment you need to do for the said policy (which is why Initial Investment = Total Investment in the above screenshot)

• On the maturity date (15/04/2028), you get the liquidation value of INR 1,01,833, effectively giving you a 10.7% IRR

• In the unfortunate case that the policyholder dies before the maturity date, the insurance company pays out the sum assured in two parts – you get paid an amount that gives you the committed IRR, and the balance is paid to the original policyholder as insurance cover

Okay, now that you know the process, let’s answer a few questions about the platform.

What returns can investors expect?

While the actual returns depend on the exact policy, investors can expect average returns in the range of 8-12%. Due to the way ULIP and Endowment (traditional) policies work, the return would be higher on a ULIP plan compared to an endowment plan.

How are returns taxed?

The taxation of returns is slightly complex. Let’s look at it in detail.

1. If the sum assured is 10 times or more of the premium paid, according to section 10(10D), the below is the taxation applicable on the returns:

   1. ULIP policies:

      1. Issued before 1st February 2021: Tax free

      2. Issued on or after 1st February 2021:

         1. If annual premium <= 2.5 lakhs: Tax free

         2. If annual premium > 2.5 lakhs: LTCG @ 12.5%

   2. Endowment policies:

      1. Issued before 1st April 2023:

      2. Issued after 1st April 2023:

         1. Annual premium <= 5 lakhs: Tax free

         2. Annual premium > 5 lakhs: Taxed as per tax slab

2. If the sum assured is less than 10 times the premium paid, then the returns are classified as “Income from other sources” and taxed as per the investor’s tax slab.

Are the returns fixed or is there some volatility?

The concept of return is slightly different here. There is a fixed return % (IRR) that The Policy Exchange assures the investor. Depending on when the money comes in from the insurance company (whether at maturity or on death of policyholder), the value of the amount may vary, but the return percentage is fixed for endowment/traditional policies. However, for ULIP policies, the returns are tentative, as they are dependent on the return delivered by the underlying mutual fund.

In that sense, the investor can expect a fixed percentage for non-ULIP policies. However, even there, the value indicated is tentative and may be different, depending on when it comes in.

How does the original policyholder still keep their life cover?

As mentioned in the example earlier, the XIRR committed to the investor is calculated based on the money coming in at the time of maturity. Since the investor is paying a discounted value at the time of assignment, they make a decent return. If, however, the original policyholder dies before the maturity date, the money comes in earlier, which increases the XIRR for the investor. In this case, the entire amount is not paid to the investor. They are paid an amount which gives them the committed return (IRR), and the rest is paid out to the original policyholder as life cover.

How are claims managed? What happens in case of the original policyholder’s death?

The investor doesn’t need to do anything. The respective insurance company handles the fund flows. It gives the investor the principal + committed IRR, and the balance to the nominee of the original policyholder.

What’s the typical investment horizon that investors can look at?

While investment horizons can vary, most of the policies that The Policy Exchange lists typically mature in 5 years or less. So this can be considered as a short-term investment (although there are higher term policies on the platform as well).

Is it a regulated product?

The base product is an insurance policy, which is regulated by IRDAI. The process of policy assignment is also legally governed by rules under Section 38 of the Insurance Act, 1938. However, The Policy Exchange is a platform, and not an insurance provider – and therefore not regulated.

So what are the risks?

While the product largely lies in the low-risk category, there are some things that investors should consider:

1. Credit risk: While technically it is not 100% risk-free, the credit risk is very low, since it will only happen in case the insurance company defaults on its payment, which is a rare scenario.

2. Platform & Operational risk: There is a platform risk associated with this. The policy is assigned from the insurance company itself, and the money flows from them to the investor and original policyholder; so financially there should not be an issue. However, in case something untoward happens, or payments are delayed, it could be an operational hassle for the investor.

3. Liquidity risk: The investment carries a lock-in period during which withdrawal is not allowed or will result in loss. Additionally, the policy cannot be reassigned thereafter, so investors must keep these things in mind before investing.

4. Information asymmetry: There is no public information available on the policyholder whose policy is being purchased. So for the investor, there is heavy dependence on The Policy Exchange for doing the due diligence of the policy and policyholder.

5. Counterparty risk: The investor’s payoff depends on the life insurer honoring claims and on the insurer’s solvency and claims processes. If the insurer disputes an assignment or delays claim settlement, investor returns can suffer.

   For example, in rare cases where the policyholder passes away within 3 years of the date of the first premium and the insurance company denies the claim for a legitimate reason, the investor gets an amount equal to the value of the premiums paid till the date of death, while the original policyholder does not get any life cover. In such cases, the investor may or may not get the committed XIRR, depending on the policy terms and the amount paid by the insurance company.

   However, it is worth noting that such scenarios are extremely rare, and here too, the risk is minimal.

6. Regulatory uncertainty: Assignment of insurance policies is a practice that is legal and governed by Section 38 of the Insurance Act, 1938. However, there is a regulatory risk in case rules and regulations change.

So why invest in pre-owned Insurance instead of FDs or debt funds?

There are a few compelling reasons why investors would want to consider investing in pre-owned insurance policies:

1. Higher returns: The return that you get with this asset class is in the range of 8-12%, which is higher than most FDs and mutual funds

2. Diversification: It helps you diversify your wealth across an alternate asset class so that if your mainstream assets are not performing well, there is something to fall back on

3. Low-risk: Pre-owned insurance policies are a relatively safe investment avenue. As long as the paperwork is done correctly, there is an extremely low chance of the investor not getting the required returns

Our verdict?

The Policy Exchange seems to be a low-risk, innovative platform for investors looking to make short to medium-term returns. However, investors should keep the above cited areas in mind before investing.

Please note that this is an opinion blog and not an official research or investment advice. This blog neither encourages nor discourages you from investing in any particular asset class or platform.

If you would like to learn more about bonds and various other alternative investment options, you can join the ALT Investor community here. We have various industry experts and fellow investors as part of our community who can help you with your queries and provide useful insights!

So in this latest blog of ours, we bring to you all the key information regarding Quant’s first SIF scheme – from its objective, investment strategy, asset allocation, risk profile, to minimum investment amount and expenses.

But first, let us refresh your memory on what SIFs are.

SIFs (Specialized Investment Funds) are a newly introduced category of mutual funds aimed at investors looking for advanced investment strategies. SIFs aim to fill the gap between mutual funds and PMS, in terms of minimum investment amount, portfolio flexibility, etc. Here’s a ready reckoner to help you understand it better, and compare it with other asset classes:

Quant Opens NFO Subscription For India’s First SIF

Quant has opened NFO subscription of India’s first SIF ‘QSIF Equity Long-Short Fund’, with an open-ended, equity-focused, long-short investment strategy. The NFO is open from 17.09.2025 to 01.10.25, with the pricing of Rs 10 per unit. The allotment date is 7th October 2025.

The AMC is expected to calculate and disclose the first NAV within five business days from the date of allotment under the NFO. Investors may apply for the NFO by contacting Quant mutual fund’s Investor Service Centres (ISCs) or Official Points of Acceptance (OPAs). For more details click here.

Key Features & Structure Of The Scheme

• Direct as well as regular plans offered for both Growth and IDCW (Income Distribution cum Capital Withdrawal) options

• NIFTY 500 Total Return Index (TRI) is used as the benchmark index against which investors can evaluate the fund's performance. In our view, investors should be careful while benchmarking against the Nifty 500 TRI, due to the following reasons:

-Chances of unrealistic expectations: Using Nifty 500 index as benchmark may create unrealistic expectations during bull markets, where long-short funds may underperform due to short positions dragging returns.

-Inappropriate performance measurement: The fund's 25% short exposure and derivative strategies create a fundamentally different risk-return profile than a long-only index like Nifty 500.

-Mismatch in strategy: Long-short funds may not really be correlated with traditional indices like Nifty 500 TRI. In such a case, for example, if the SIF doesn’t generate a good alpha over the index in a bull run, investors may panic; while in reality, it is not designed to mimic a larger equity index. In the same way, the converse could be true.

Having said that, SIFs are a new breed, so the market will evolve and better benchmarks may be established. Right now, investors should take the benchmark comparison with a pinch of salt.

• Minimum investment for this SIF is Rs 10 lakh if invested in lump sum, or Rs 10,000 if SIP route is chosen. Note that this Rs 10 lakh is not the minimum threshold for each scheme of the AMC. You can invest that Rs10 lakh in total across all schemes offered by the AMC/fund house, which, in this case is QSIF. So you can maybe invest Rs 6 lakh in QSIF Long-Short Fund and the other Rs 4 lakh out of the minimum Rs 10 lakh limit, in another QSIF scheme.

• Risk appetite for this scheme is high (level 5 in AMFI’s risk band).

• Expense ratio mentioned for this scheme is up to 2.25% of daily net assets.

• Exit load is 1% if redeemed/switched out on or before completion of 15 days from the date of allotment of units. No Exit Load if units redeemed/switched-out after 15 days from the date of allotment.

• Asset allocation adopted by this scheme is focused mostly on investment in equity and equity related instruments (at least 80%).

Here’s the precise breakup:

How Does The Long-Short Investment Strategy Work?

The ‘Equity Long-Short Investment Strategy’ offers a mix of taking long positions in undervalued stocks whose price is expected to rise, and short positions in overvalued stocks whose price is expected to fall.

Let’s make it simpler for you. A fund opting for a long-short strategy tries to make money in two ways, one is when the prices of some stocks go up, and the second one, when prices of some stocks go down.

Here’s how it works:

When a fund takes a long position, it buys stocks whose price is expected to rise, and therefore makes money when that happens.

On the other hand, when a fund takes a short position, it sells stocks whose price it thinks will fall. The catch here is that the fund does not actually own those stocks upfront, and has instead borrowed them usually through a broker who acts as a middleman. So, when these stocks drop in value, the fund sells these stocks and then buys them at a lower price later, which is how it ends up earning on that investment.

So, through this combination of taking long and short positions, the fund aims to get the best of both worlds, the rising as well as the falling market.

How does this strategy help?

• Reduces overall market risk: By pegging your moves based on the expected fall in the prices of some stocks and the rise in some others, the fund can minimize losses when stock markets fall (as the gains from short position can potentially offset losses from long position).

• Seek profits in any market: While more risky, this combination of long and short strategy holds the potential to seek profits in both scenarios of the market, when it's going up and/or when it's going down.

• Opportunity to capitalise on overpriced stocks: Long-short funds don’t just buy stocks that are cheap and likely to go up—they also sell stocks that are overpriced, hoping to buy them back later at a lower price and earn a profit from the difference between higher short sale price and the lower purchase price.

QSIF Equity Long-Short Fund’s Investment Approach

Long Equity Positions (80%–100%): At least 80% of net assets are invested in listed equity and equity related instruments, such as common stocks, preferred shares, and equity-linked securities (e.g., convertible bonds). These positions are selected based on fundamental analysis, targeting companies with strong growth prospects, attractive valuations, and sustainable competitive advantages. The long portfolio emphasizes diversification across sectors and geographies to reduce concentration risk while maximizing return potential.

Short Derivative Positions (upto 25%): The strategy employs unhedged derivative instruments, including stock futures, index futures, and options, to establish short exposures of up to 25% of net assets. These positions are designed to profit from declining prices of specific securities deemed overvalued or to hedge against broader market corrections. The tactical use of shorts allows the fund to generate returns in bearish or volatile market conditions, enhancing overall portfolio resilience.

Debt and Money Market Instruments (upto 20%): A portion of the portfolio, up to 20%, is allocated to debt or liquid money market instruments, such as treasury bills or short-term government bonds. This allocation allows a certain fixed return generation and serves as a liquidity buffer, enabling the fund to meet 15 redemption requests, seize new investment opportunities, or manage margin requirements for derivative positions without disrupting the core equity holdings.

Hedging Flexibility (up to 100% additional hedging): Beyond the 25% unhedged short exposure, the strategy allows for up to 100% hedging of the remaining long equity positions using derivative instruments, such as index futures, options. This capability enables the portfolio to achieve fully hedged exposure when market conditions warrant a defensive stance, such as during periods of heightened volatility or anticipated downturns.

Inside The Fund Management Team Of This QSIF Scheme

The ‘QSIF Equity Long-Short Fund’ is headed by the following fund managers who have a rich experience in risk appetite, valuation, debt and liquidity analytics:

1. Sandeep Tandon

Sandeep is the founder & chief investment officer of the Quant Group. He has a vast experience of around three decades in the capital markets, and has held key roles in GIC mutual fund, IDBI Asset Management, ICICI Securities, Kotak Securities and REFCO. He had also worked at the Economic Times Research Bureau. Currently he holds the position of QSIF’s CIO (Chief Investment Officer).

2. Lokesh Garg

Lokesh is one of the money managers in this fund. He has a rich experience of over two decades of experience in equity markets with Kotak Institutional Equities and Credit Suisse/UBS. He is also a Level III Chartered Financial Analyst and has also worked with ICICI Bank (Treasury) and Infosys.

3. Ankit Pande

Another fund manager for QSIF is Ankit Pande, who has over a decade of experience in Indian equities. After initially starting his career in core banking software with Infosys, Ankit has won the 2014 Thomson Reuters StarMine Analysts award for top ‘Industry Stock Picker’ in the IT sector. He has worked with foreign institutional investors across APAC in a business development role, and received his CFA charter from the CFA Institute, USA, in 2015.

4. Sameer Kate

With over two decades of experience in Indian equities and derivatives dealing, Sameer is also one of the key fund managers for Quant’s SIF scheme. He had previously worked for over 16 years at Kotak Securities as a sales trader and also as senior sales trader at Investec Capital covering equity and derivatives trading for domestic and foreign institutional clients.

5. Sanjeev Sharma

Sanjeev brings a rich and diverse experience of over 15 years in the capital markets, prior to his role as a fund manager for QSIF. He specializes in analysis of credit risk and monitoring plus assessing investment opportunities across asset classes. He has a deep understanding of macroeconomic policies and its impact on the credit markets. Previously he had worked with the Tipsons Group, Escorts Mutual Fund, and PACE group.

Risks Associated With QSIF Long-Short Equity Fund

1. Risk category of level 5

The level 5 risk assigned to this long short equity scheme of QSIF indicates that investors face the highest possible risk of losing their principal investment. This makes such a fund only suitable for aggressive investors who are aware of the possible losses and willing to take such a high risk.

2. Possibility of unlimited losses on short side

If a stock that the fund had shorted goes on to sharply rise instead of falling, the possible loss can be unlimited, because theoretically a stock's price can keep rising forever.

3. Complexity and Transparency Issues

If you are not well-versed with such deep concepts such as long-short funds, it might get difficult to understand and monitor these funds when compared to the usual equity funds. Moreover, some fund managers may use even more complex derivative strategies, making it harder to understand for you as an investor, regarding what risks are being taken.

What About Taxation On Returns?

Gains on transfer/redemption of SIF’s units are determined based on the type of mutual fund and the holding period. The taxation rules are the same as those applicable for respective categories of mutual funds.

Here’s a summary of the applicable taxation rules for this equity oriented SIF:

What To Consider Before Investing In This Scheme?

Presence of high-risk: This fund is specifically suitable for investors who can afford to take substantial risks, as the Level 5 risk rating (as per AMFI’s scale) indicates that this is the highest risk category. So factor in this aspect before investing in this scheme.

Uncertain expense ratio: QSIF’s long short equity scheme has currently mentioned‘ upto 2.25%’ expense ratio. So, the exact expense ratio is not yet determined, and it might become clearer after the NFO, since the AMC would only then ascertain its final costs as per actual fund operations, administration fees, transaction costs, etc.

Not suitable for novice investors: This fund targets investors who understand and are comfortable with complex investment strategies, including derivative instruments and short-selling mechanisms. The strategy involves multiple sophisticated techniques including synthetic shorts, bear spreads, and various options strategies, which a novice investor may not understand.

Should You Invest In Quant’s NFO of India’s First Long Short Equity SIF?

Pros of investing in this NFO

• Fixed price of ₹10 per unit during the NFO.

• Early access to the fund’s strategy as one of the first investors.

• Potential to earn higher returns if the fund performs well soon after the NFO and the NAV rises.

• Opportunity to participate in India’s first long-short equity SIF.

Cons of investing in this NFO

• No performance tracking data available at this stage.

• Lack of visibility into the fund’s exact portfolio composition.

• Limited insights into strategy execution during the NFO.

• Some funds may go through a volatility or adjustment phase right after the NFO, which could be avoided by investing later.

• Exact expense ratio and fund behavior will only become clearer post-NFO.

Conclusion

It’s a no-brainer that Quant Mutual Fund's launch of India's first SIF, the QSIF Equity Long-Short Fund, marks a significant milestone in the mutual fund landscape, as it offers sophisticated investors a new avenue for advanced investment strategies. But, although the fund presents opportunities for high returns through its long-short strategy, it also carries substantial risks, making it suitable primarily for experienced investors with a high-risk tolerance.

As an investor you should carefully consider the fund's risk profile, the complexity of its strategies, and the lack of historical performance data before investing in its NFO and even in the initial phase post that. And as usual, do thorough research and have a clear understanding of your financial goals and risk appetite before putting your hard-earned money into any asset class. Consult with your trusted and reliable financial advisor before going forward.

Please note that this is an opinion blog and not official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class or deal or platform.

So in this blog of ours, we will deep dive into how Infinite works, why it was introduced, and what we like and dislike about it.

What is Infinite?

Infinite is a feature introduced by Grip Invest, which enables you to set up a SIP for your Bond/ SDI returns into a debt mutual fund. Every month the returns you get from the Bond/ SDI get auto-invested into a mutual fund of your choice, through SIPs.

Let’s dig deeper and help you understand how it works.

How Infinite works

If you invest in Bonds or SDIs, you must be knowing that getting monthly returns is the norm, right? But with Grip Invest’s Infinite tool, the monthly interest or payouts from eligible Bonds and SDIs that are credited into the investor’s savings account don’t just sit idle. Instead, these monthly returns are automatically transferred to a chosen mutual fund via the SIP route.

The reinvestment amount adjusts for any variation in bond interest or loan prepayments by SDI issuers, which is why investors need not monitor or update the SIP themselves every month.

And once the underlying bond or SDI matures, the SIP concludes automatically. The investor can choose to stop, modify, or withdraw that mutual fund investment any time before that as well.

We tested Grip’s Infinite feature, but before we dig deep into our review about it, let us bring to you a real-world example to give you a fair idea regarding how much more returns you can potentially earn with vs without activating Infinite:

Assuming you invest Rs 88,500 in an SDI deal at Grip with a tenure of 1 year. After the end of the tenure, you would have gotten back totally Rs. 94,500 – making the YTM as 11.6% and absolute return as 7.1%, when Infinite is not activated.

But if you choose to activate the Infinite feature, all your interest payouts get reinvested into a debt mutual fund. Assuming the returns on the debt mutual fund chosen by you is 9% p.a., in total, you get back Rs. 98,500 after a year (SDI payout + debt fund returns), implying a 12% return overall.

So in terms of absolute returns, you as an investor get approximately 70% more returns by activating the Infinite feature, vs a non-Infinite deal.

Now let's come back to our review of the ‘Infinite’ feature. Here’s what we like and dislike about it:  

What we like about Infinite

• Potential to earn higher returns

  The core benefit and aim of Infinite is to make your money earn higher returns for you. While Grip Invest claims an average of up to 30% more v/s a non-Infinite investment, this figure can vary depending on which debt fund you choose, the coupon payment, whether it’s a bond or an SDI etc. But largely, the concept in itself is impressive and holds the potential to boost your portfolio’s returns.

• No manual effort

  The convenience of not requiring any manual effort every month for reinvestment is a big plus in case of Infinite. Once you activate Infinite by doing the one-time activity of choosing the debt fund to reinvest your monthly payout, the rest happens on auto pilot.

• Adds diversification to your portfolio

  Investing your payouts from bonds and SDIs into debt mutual funds through SIPs helps in adding a layer of diversification to your portfolio.

• Automatic adjustment of SIP amount

  Another key benefit of Infinite is that if there is any variation in the bond/SDI’s monthly payout, it gets automatically adjusted in the SIP. For example, in the case of bonds, the interest amount may slightly vary every month, depending on the number of days in that month.

Whereas in the case of SDIs, the returns tend to see principal prepayments happen when borrowers pay back their loans earlier than scheduled. In both the cases, the SIP amount will automatically adjust to match with the monthly payout received, without any manual intervention required from the investor's end (shown below).

• Flexibility to sell anytime

  The combination of zero lock-in period for Infinite and the availability of the sell anytime feature on Grip’s platform offers investors the flexibility to withdraw their investment whenever they want to.

What we did not like about Infinite

• Eligibility restrictions

  Given the nature of the Infinite feature, it is currently available only on Bonds and SDIs that offer monthly returns. So, not all bond/SDI deals on Grip’s platform are eligible for auto-reinvestment through this feature, which can limit diversification or choice of investments.

• No option to invest in direct plans

  The debt mutual funds in which you get to invest while choosing the Infinite feature on Grip’s platform are regular plans and not direct ones. This can mean relatively lower returns for investors, since direct funds by definition offer higher returns than regular funds due to lower expense ratios.

• Market volatility

  Depending on which debt fund is chosen by the investor, it may be subject to variations in returns , which may not always give you a high delta on your returns.

• Less suitable for lower investment amounts

  Given that the minimum investment amount in SIPs is Rs 100, an investor investing a small amount in bonds would not be able to hit the minimum SIP amount every month. For example, if you invest Rs 10,000 in a bond which has face value of Rs 1,000, coupon rate 10% p.a. (payable monthly), your coupon payment per year would be Rs 1,000, which comes out to be roughly Rs 83 per month as interest payout.

  Now, when you activate the Infinite feature for this deal by choosing a debt fund to invest your monthly interest in, the minimum amount for monthly SIP is Rs 100, but your monthly interest payout is less than that. Hence, you as an investor would need to invest the difference amount as well every month, which, in this case, comes out to be roughly Rs 17. So, throughout the tenure of the bond until maturity (35 months), you would be investing approximately Rs 595 more through your monthly automated SIPs along with the interest that will keep getting reinvested every month.

Having said that, the minimum amount is set by SEBI, so there’s not much Grip can do here.

Conclusion

It’s fair to say that Grip’s Infinite feature is indeed innovative, and does create a streamlined process for reinvesting your monthly returns from bonds and SDIs, into debt mutual funds. This mechanism offers the potential for higher returns, convenience through automation, and added portfolio diversification.

However, it's noteworthy to consider this feature’s eligibility restrictions, lack of direct plan options, and the suitability for higher investment amounts before enabling it.

Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision when considering Grip’s Infinite feature. The blog neither encourages nor discourages you from investing in any particular asset class or platform or feature.

1. Bonds are essentially loans you give to companies or governments, where you earn interest (coupon) and get back the principal at maturity.

2. The yield of a bond is influenced by the price you pay for it, which can be at a discount or premium to its face value.

3. There are various types of bonds, including government, corporate, inflation-indexed, fixed-rate, floating-rate, zero-coupon, perpetual, convertible, callable, puttable, green, and municipal bonds.

4. Bonds are considered less complex once you understand key concepts like face value, coupon rate, credit rating, and yield.

5. You can invest in bonds through SEBI-registered online bond platform providers like Grip Invest, Wint Wealth, and Aspero.

Have you ever lost money because a friend or relative of yours never paid you back? In situations like these, it might have been better if you had lent your hard-earned money to a big and rather credible company like Tata or Adani? Or even to the government?

But how can you do this? Can you really loan your money to them? Well, you definitely can, by investing in their bonds!

So let us explain to you the concept of bonds, how they work, what their types/categories are, and the related terminologies you must understand.

What Is A Bond?

Bond is basically a loan that you give to a company or government.

When you buy a bond, you are basically lending your money to the issuer, who may be a company, government, municipality, or a corporation. In return for your invested money, the issuer promises to pay you a specified rate of interest (called as coupon) during the tenure of the bond, and repay the principal, also known as face value or par value of the bond, when it reaches maturity.

Let’s Understand How Bonds Work With An Example

Suppose Reliance Industries (the issuer company) needs Rs 5,000 crore to fund expansion of its business, and it decides to skip going to a bank for loan or raise an IPO, and instead, issues corporate bonds to raise funds.

The face value of each bond which Reliance issues is Rs 1,000. This is the principal amount which the issuer (Reliance) is expected to repay to you at maturity (i.e. the end of the tenure).

So, for example, if you invested in 100 such bonds at face value, you are basically lending Rs 1 lakh (Rs 1,000 face value x 100 bonds) to Reliance, who will repay this amount at maturity.

The credit rating assigned to this bond might be AA, which indicates that Reliance seems to have a strong capacity to meet its financial commitments, with very low default risk. The lower the rating, the higher the risk of default, and vice versa. Click here to understand more about credit rating mechanism and role of agencies like CRISIL, ICRA, etc.

Now coming to the vitamin M (money) question- what will you earn as an investor? Well, firstly, it's the coupon rate, i.e. the fixed annual interest rate which you will earn on a bond, expressed as a percentage of the bond’s face value.

Suppose the coupon rate is 8.5% p.a. here, that would imply that Reliance (the issuer) will pay you Rs 85 per bond every year (Rs 1,000 × 8.5% = ₹85). If you hold 100 bonds, you'll receive ₹8,500 annually as interest.

Now, at the time of maturity (which let’s assume as March 15, 2029), Reliance would repay the face value of Rs 1,000 per bond, i.e. a total of Rs 1,00,000.

But that’s not all. Besides the coupon payment, another concept you need to understand and factor in when investing in bonds, is the yield. After all, this is what you actually earn based on the price you paid for the bond.

Here’s how it’s different from the coupon.

See, it's not always that you buy a bond at exactly the face value. Sometimes it’s more , sometimes less.

So in the above example, you may buy the bond either at Rs 950 (discount) or at Rs 1050 (premium), with the price depending on the demand and supply.

When you buy the Rs 1,000 bond at Rs 950, that Rs 80 coupon suddenly means a higher return on your investment, which basically means a higher yield. Whereas if you buy that bond at Rs 1,050, your yield will be lower. So overall, in bonds, it’s not just about the interest rate, it’s about the price you paid for it too, which you need to factor in.

There are various other concepts in the calculation of Yield too, but let’s not get into the nitty gritties and confuse you. For now, understanding this concept should suffice :)

While everyone considers bonds to be complex, that perception is not really true. As an investor, once you understand the above concepts, it gives you a good place to begin.

Okay, Now Let’s Look At The Types Of Bonds

Bonds as investment instruments have multiple categories into which they can be divided, with the major ones being the following:

• Government Bonds

The central and state governments in India issue government bonds to fund public projects. These bonds are highly regarded for their safety, as the government backs them. Additionally, they provide moderate returns of around 5.5%-6.5% p.a. and are generally long-term investment options.

• Corporate Bonds

Simply put, a corporate bond is a loan that you give to a company, who in return gives you periodic interest payments and eventually your principal (the money you invested) back, when the bond matures at the end of the tenure. Interest rates on corporate bonds generally range around 9%-14%.

• Inflation-Indexed Bonds (IIBs)

As their name suggests, IIBs are a type of government bonds that help protect your money from losing value due to the ‘money eater’ inflation. Unlike regular bonds with fixed returns, both the interest and the principal of IIBs go up with inflation, usually based on the Consumer Price Index (CPI). This means your investment keeps pace with the rising prices!

• Fixed-Rate Bonds

Fixed-rate bonds offer investors a consistent and guaranteed interest rate throughout the entire investment period, providing predictable and stable returns. This makes them ideal for those who prioritize financial stability and long-term income.

• Floating-Rate Bonds

Floating rate bonds have variable interest rates that are linked to a reference benchmark (this rate is usually a widely recognized, market-driven interest rate such as repo rate or NSC rate, that reflects current economic conditions.)

The rates are adjusted periodically, thus offering investors protection against fluctuations in interest rates.

• Zero-Coupon Bonds

As their name suggests, zero-coupon bonds do not pay any interest to the investor. ZCBs are issued at a discount on the bond’s face value and upon maturity, investors receive the face value of their investment. So, you, as an investor, profits from the difference between the discounted buying price and the face value of the zero coupon bond.

• Perpetual Bonds

Perpetual means everlasting, or forever, right? Perpetual bonds work in a similar manner. These are bonds that can keep paying interest to the investor for an infinite period, until the issuer itself redeems back the bonds at a particular date.

• Convertible Bonds

A convertible bond pays regular interest like a normal bond but also gives you, i.e. the bondholder, the option to convert it into a fixed number of shares of the issuing company’s stock.

• Callable Bonds

Callable bonds give the issuer the right to redeem the bonds before their maturity date at a predetermined price and time. To compensate investors for the increased risk of early redemption—where they might receive their principal back sooner than expected and potentially miss out on future interest payments—these bonds typically offer higher coupon rates.

• Puttable Bonds

Puttable bonds provide bondholders with the right to sell their bonds back to the issuer before the maturity date, usually at a predetermined price. These bonds typically offer lower coupon rates compared to regular bonds, reflecting the added flexibility and early redemption option they provide to investors.

• Green Bonds

Green bonds work just like regular bonds, but with one key difference. The money raised from investors in case of green bonds gets used exclusively towards financing projects that have a positive environmental impact, such as renewable energy and green buildings.

• Municipal Bonds

Municipal bonds are issued by local governments and urban development authorities in order to raise funds for infrastructure projects and public services. The government has actively encouraged and recommended local entities to utilize bonds as a means to meet their funding needs.

Okay, So How Can You Invest In Bonds?

Well, there are a bunch of SEBI-registered OBPPs (online bond platform providers) who enable you to invest in bonds. Some of the prominent OBPPs include Grip Invest, Wint Wealth, and Aspero. We have done a detailed analysis on these companies – feel free to click on the links to see the details of these platforms.

Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision when stepping into the bond market, and it neither encourages nor discourages you from investing in any particular asset class or platform.

If you would like to learn more about bonds and various other alternative investment options, you can join the ALT Investor community here. We have various industry experts and fellow investors as part of our community who can help you with your queries and provide useful insights!

1. The RBI's August 2024 guidelines significantly impacted India's P2P lending industry, shifting the risk entirely to lenders and prohibiting platforms from promoting P2P lending as a no-risk investment product.

2. The guidelines banned the cross-selling of unrelated products, enforced T+1 settlement with escrow accounts, and required platforms to charge a fixed fee, affecting the revenue models of P2P platforms.

3. The industry saw a decline with some platforms shutting down or pausing operations, but resilient players like LenDen Club and IndiaP2P have adapted and are recovering.

4. The consolidation in the industry has led to lower customer acquisition costs, and some fintech startups are exploring P2P lending licenses, indicating potential growth.

5. The blog suggests that the RBI's strict guidelines have ensured that only serious and compliant players remain, creating a more secure environment for investors and a promising future for the industry.

It’s been exactly a year since RBI’s August 2024 guidelines on P2P lending. So we at ALT Investor decided to dive deep into this industry and see where it is today.

India’s P2P lending industry had first come under formal regulation in 2017. However, things changed last year after RBI’s unforgettable circular tightened P2P lending norms.

In this blog, we’ll first briefly discuss the guidelines that RBI issued that impacted P2P platforms, and then see how the industry is shaping up today.

Let’s begin…

First, what were the RBI guidelines that impacted P2P lending?

While RBI’s circular had a bunch of changes, we’ll talk about a few of them which had maximum impact on P2P players.

1. Risk to be borne by lender

RBI stated that P2P platforms need to explicitly take a declaration from the user that he/she understands the risks of investing in P2P platforms, with the highest risk being that their capital could also go to zero. Essentially, with the circular, RBI said that the whole risk needs to lie with the user and not the platform. Moreover, platforms cannot promote P2P lending as an investment product with features like tenure linked assured minimum returns, liquidity options, etc.

This meant that the risk exposure was fully on the lender (user). It also meant that P2P players had to rework on how they would position their platform. It therefore immediately went from a no-risk platform (as positioned by a lot of P2P players) to a platform that had its fair share of risk.

2. Ban on sale of unrelated products

RBI’s circular banned platforms from cross-selling any other product, apart from loan specific insurance products. Since some P2P platforms had started cross-selling other products on their platform, this ban hit their revenues.

3. T+1 settlement with Escrow accounts

Probably the most hard-hitting guideline – RBI said that there must be at least 2 escrow accounts, where

• funds from the lenders’ bank account should only go into the lender escrow account, and eventually into the respective borrower’s bank account

• repayments from the borrowers will only go into the borrower escrow account, and eventually into the respective lender’s bank account

In addition to this, no funds should stay in either of the escrow accounts for more than T+1 day. This means that from the date the fund is received in the escrow, within a day, it should be transferred to the respective borrower/lender account.

If a borrower’s loan request isn’t fully funded within one day, any partial funds collected must be returned to the respective lenders.

Now this rule, while ensuring transparency and preventing any pooling of funds, created operational headaches for platforms. P2P platforms traditionally allowed a loan listing to stay open for days/weeks to gather multiple lenders; but RBI said that now funding must close in 24 hours.

Moreover, since the funds were supposed to be moved out from the escrow within a day, this meant that platforms could no longer use the “park now and withdraw any time” narrative for users on the platform.

4. Fixed fee to be charged by platforms

According to the circular, P2P platforms are supposed to charge a fixed fee (or a fee in proportion to the principal amount of the transaction) only. The fee should not be dependent on the repayment by the borrowers.

This reduced the flexibility for P2P platforms to earn revenue.

5. No matching within closed user group

Essentially, RBI said that lenders and borrowers cannot be matched within a closed user group. This meant no affiliate partnership models would exist. And since P2P lending programs of startups like Cred (with Cred Mint), BharatPe with (12% club) and Mobikwik (with Mobikwik Xtra) were all based on closed group matching (within the same user base), they all had to shut shop.

While these startups didn’t have their own P2P platform, they had partnered with players like LenDen Club, Liquiloans and Lendbox for these offerings. So this guideline impacted all these platforms combined.

While there were a lot of other points to comply with, these were some of the most hard-hitting guidelines that impacted P2P platforms.

So how has the industry evolved and where is it today?

Let’s dig deeper…

What does the industry look like today?

There is a narrative going on which says that the industry is declining, it’s doomsday and the future is bleak. But our interactions with platforms that are still running, say otherwise. Let’s look at the impact one by one.

First, B2C payment apps that had a P2P play in them without actually having a P2P license (and were offering these products by way of partnerships) – like Cred and BharatPe, either shut their programs or paused them. This also affected volumes of P2P players who had partnered with them at the backend to provide the core services, like LenDen Club and Lendbox.

Some P2P license holders also shut down or downsized. Liquiloans for example, at the time of writing this article, had stopped issuance of new loans, and was focusing on collections instead. There were reports that Faircent too has stopped disbursing loans. ALT Investor, however, could not verify this claim.

Having said that, a lot of other smaller P2P startups had also either shut down, pivoted or played the “wait and watch” game for the industry to mature.

There are some players that were resilient though. LenDen Club and IndiaP2P, for example, are back in the business already, with compliant systems and processes.

While the disbursal volumes are still anywhere between 15% and 30% of pre-2024 levels, they’re rising steadily.

According to Bhavin Patel (CEO, LenDen Club), the industry should be back to peak levels in about 18 to 24 months.

For IndiaP2P, volumes are already reaching pre-2024 levels, in fact with lower customer acquisition costs (CAC). Neha Juneja (CEO, IndiaP2P) feels that this could be the case industry-wide, and not just for their business.

A major reason for the lower CAC is consolidation – Given that the demand for loans is still high, lesser platforms now disbursing loans means lower marketing required, which in turn means a lower CAC.

In fact, there are reports of other fintech startups like Jupiter and 1Finance also looking at P2P lending licenses. These claims, however, could not be verified by us.

So what’s the verdict?

All said and done, while the last year was tough for P2P platforms, the few who have continued to build compliant systems are the ones who, it seems, will reap the benefits. Our opinion at ALT Investor is that the narrative about “RBI making it difficult for P2P businesses to operate”, is very nuanced, and probably not true. The guidelines have, in effect, ensured that only serious, compliant players remain in the business – making the environment more conducive for investors (lenders).

Bhavin also emphasised that given the concerns RBI had, regulatory actions were actually necessary. But strict regulatory actions don’t necessarily mean it’s bad for the industry. The future, according to him, will see good growth with more compliant businesses.

And we agree. P2P lending, if done well, is a great product – for lenders and borrowers both.

So all in all, the worst phase for P2P platforms seems to be over. Let’s see in which direction the industry moves in the coming months. Our bet is on “upwards”.

Please note that this is an opinion blog and not official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class or deals or platforms.

1. Curie Money is a unique fintech app in India that integrates UPI payments with liquid mutual fund investments, aiming to offer higher returns on idle cash compared to traditional savings accounts.

2. The app invests users' money in SEBI-regulated liquid mutual funds through trusted AMC partners, allowing users to earn up to 7.3% returns, with instant redemption capabilities.

3. Curie Money earns revenue through commissions from AMCs as an AMFI-registered mutual fund distributor, without charging hidden fees to customers.

4. The app has partnered with Yes Bank as a UPI-PSP partner, facilitating UPI transactions while maintaining bank-grade security and compliance standards.

5. While offering benefits like higher returns and no minimum balance requirements, Curie Money also presents challenges such as restricted liquidity, higher risk compared to savings accounts, and the absence of direct mutual fund plans.

‘2016 was a bittersweet year for most Indians. The same year which witnessed the announcement of demonetization of ₹500 and ₹1,000 notes, also saw the introduction of UPI in India. And since then, UPI has been nothing less than a revolution in India's financial industry. Year after year, the popularity of UPI has continued to grow which is why many new features and apps are coming up to entice UPI users, be it in the form of cashbacks, discounts or rewards on UPI payments.

But there is a unique fintech app which is not giving you any reward points or cashback or discount, but in fact aiming to be India’s first and only UPI app that grows your money. The app we are talking about is Curie Money, a fintech company into which we will deep dive today to give you a fair and transparent idea about its corporate structure, business model, what it does, how it works, etc, and what we like and dislike about it.

So let’s begin!

Company Structure

Founded in 2022, Bengaluru-based Curie Money is a UPI app which invests your money in SEBI-regulated liquid mutual funds through trusted AMC partners. It is registered under the name Yield Technologies Private Limited, which has developed, designed and also operates the Curie Money website.

As per MCA data (as on 14th July 2025), Curie Money has two directors:

1. Tushar Choudhary

2. Ghosh Arindam

Both the young co-founders of Curie Money, Arindam and Tushar graduated from the prestigious IIT-Roorkee, completing their BTech in Computer Science and Electronics & Communications Engineering respectively, in the year 2017. Both of them had previously worked at the American banking giant Goldman Sachs before starting Curie Money 3 years ago in 2022.

How Curie Money Works

Given that we generally end up keeping a lot of our money in our savings bank accounts which barely earn us 2.5%-3% interest, Curie aims to give you higher returns by investing your money in liquid funds, where it can earn up to 7.3% returns*.

*\*Based on last 1 year data*

Also, as on 29 October 2025, Curie had revised the returns to upto 6.7%. Note that the liquid mutual fund returns can fluctuate, subject to changes in market interest rates, credit risk of the underlying assets, and the fund's portfolio duration. So it is advisable to check the past returns before investing.

Here’s how the mechanism of merging UPI and liquid funds in the Curie app is done:

1. Once you sign up and your money is allocated to the liquid mutual fund of the AMC (usually allocated within T+1 working day 1–2 working days, depending on the fund's cut-off timings and the time you made the payment), you can use the Curie app to pay anyone by scanning any QR code or send money to any UPI ID—just like any other UPI app and select Curie Save as the payment method.

2. When you make the payment, Curie instantly redeems the required amount from your mutual fund and transfers it to your linked bank account in real time, within 2–5 seconds. As soon as your bank receives the amount, all that's left is to enter your UPI PIN—and the payment is complete. But, but, but, here’s the caveat.

3. Instead of the whole amount at once, you can instantly withdraw only up to 90% of your mutual fund value or ₹50,000, whichever is lower, to your linked bank account. But given that Curie currently has two partner AMCs (ICICI and Bajaj), the cumulative withdrawal limit becomes ₹1,00,000, or 90% of the mutual fund value, whichever is lower.

So what about the remaining amount? Well, Curie Money’s website/app doesn’t mention much details, so we reached out to their customer support for this clarification. Here’s how it works.

So basically, the mechanism works a bit different for the two partner AMCs of Curie Money.

For Bajaj Finserv AMC: The remaining amount can be withdrawn the next working day, again subject to the same 90%/₹50,000 limit. You’ll need to initiate the withdrawal again manually the next day.

For ICICI Prudential AMC: The remaining amount is automatically redeemed by the AMC on a T+1 working day basis., again subject to the same 90%/₹50,000 limit. The remaining amount (again subject to the withdrawal limit) gets credited to your bank account the next working day, and, unlike Bajaj’s case here, you do not need to place a manual second request.

(Note: Screenshot is of Curie Money app. When you sign up to the Curie app, it creates a folio account by sending an application to either of its AMC partners, who then sends an SMS and email to confirm the same to you).

Curie Money’s Business Model

We contacted Curie Money’s customer support to understand how the fintech earns revenue (which was reportedly Rs 35 lakh in FY24), especially because it claims that it does not charge any hidden fees or charges from the customers.

As per the response we got from Curie Money (screenshot of the email attached), the fintech earns a commission paid by the respective AMCs to them, because it is an AMFI-registered mutual fund distributor (ARN: 257706). This commission, also called trail commission, is a form of compensation AMCs give to MFDs for their service of distributing their mutual fund schemes to investors. The commissions are paid as a percentage of either the total investment amount or AUM.

Though they haven’t yet specified how much commission they earn, they had mentioned to us that the AMCs pay them standard commissions which are based on AMFI regulated structures. As per AMFI’s website, this is how the commission structure for mutual fund distributors works.

As far as the regulations pertaining to the amount of commission is concerned, the range is around 0.1%-2%, depending on the fund type, AMC policy, and distribution channel. This commission is paid from within the mutual fund scheme’s Total Expense Ratio (TER), which means that the cost is ultimately borne by investors as part of the fund’s annual expenses.

In case of liquid funds, the commission range is around 0.1%-1%, however, as per Curie Money, the commission rate is 0.05%-0.15% for the liquid funds with whom Curie has partnered.

Coming back to the customer’s point of view for fees and charges, given that Curie Money currently has two partner AMCs-ICICI Prudential AMC and Bajaj Finserv AMC, the following expense ratio and exit load is what you need to factor in when investing through them in these AMCs’ liquid funds through the fintech’s platform.

ICICI Prudential AMC’s liquid fund:

This AMC’s expense ratio for liquid funds currently stands at 0.29% p.a.(for regular plan).

Bajaj Finserv AMC’s liquid fund:

This AMC’s current expense ratio for liquid funds (as per July 2025) is 0.27% (for regular plan).

Why Has Curie Partnered With Banks If Everything Is Revolving Around Liquid Funds?

Till now, we have made you understand the key role of liquid funds in helping you grow your money through the Curie app, right? But now, you may wonder, if everything is revolving around liquid funds and the partnered AMCs, then why has Curie partnered with Yes Bank as well? Well, Yes Bank is a UPI-PSP (Payment Service Provider) partner to Curie Money, implying that it is the bank behind Curie’s UPI TPAP (Third Party Application Provider), with the UPI handle being @yescurie.

I hope everything is pretty clear to you all till now. Now we will bring to you a fair review of the platform by focusing on the aspects of Curie Money which we like and dislike.

What we like about Curie Money

• Higher returns for your idle cash: With the potential to offer up to 7.3% returns through liquid funds, you can earn much more than the traditional low-yield savings accounts that offer just about 2.5%-3% interest rates.

• No minimum balance requirement: Given that many banks still have minimum balance requirements for their savings accounts and levy charges on failure to maintain that, putting your idle money into Curie seems a better alternative, as it requires zero minimum balance.

• Safety through SEBI-regulated funds: As your money is invested in SEBI-regulated liquid mutual funds through Curie’s trusted AMC partners (currently ICICI Prudential and Bajaj Finserv), it is under SEBI’s regulation, along with the presence of Curie’s registration with AMFI (Association of Mutual Funds in India). Also, all the transactions being done are protected with bank-grade security, through partnerships with NPCI, RuPay, and PCI-DSS (Payment Card Industry Data Security Standard) compliance, with the latter being a set of security standards designed to protect cardholder data during transactions.

• Fastest instant redemption time for liquid funds: As per a conversation within our ALT Investor community, Curie’s co-founder Arindam Ghosh had claimed that Curie Money processes the fastest instant redemption currently in India, i.e. 1.5-3 seconds median. We at ALT wanted to confirm the same so we made a small investment through the Curie app and then redeemed a part of it, and the amount was credited instantly (within just about one second) into the user’s associated savings account.

What we don’t like about Curie Money

• Higher risk than traditional savings accounts: Although liquid mutual funds are generally considered low-risk funds when compared to hybrid or equity funds, they still carry higher risk than a bank’s savings accounts. This is because liquid funds invest in short-term market instruments like treasury bills, government securities and commercial papers having maturity of 91 days or less, which do carry some degree of risk. Whereas on the other hand, putting your money into RBI-regulated scheduled banks makes them less risky, with risk of bank failure relatively low, and deposits of up to Rs 5 lakhs (per bank per customer) secured under the DICGC insurance as well.

• No option to invest in direct instead of regular plans: Another key pain point for Curie Money users can be the absence of direct plans of liquid mutual funds. Currently, the platform only enables investments in regular plans of mutual funds, which thus allows it to earn distributor commissions. However, Curie’s platform is currently in its Beta version, so it may attempt to introduce the direct plans sooner or later. We shall have to wait and watch if that happens.

• Restricted liquidity through withdrawal limit: As mentioned earlier, you can instantly withdraw only up to 90% of your mutual fund value or ₹50,000, whichever is lower, to your linked bank account. While this does indeed restricts the liquidity for investors, it may, however, seem to be a little harsh to put this as a negative point particularly on a fintech platform like Curie Money, because it is actually SEBI guidelines which they ought to follow. Now we’ll have to wait and watch if SEBI revises this in the near future.

Conclusion

In conclusion, it's fair to say that Curie Money is indeed offering a unique approach to UPI payments by integrating them with liquid mutual fund investments. While the concept of sweep-in FDs has been quite common, such a concept of sweep-in mutual funds brings a fresh air of innovation.

Here it's noteworthy that although Curie Money provides benefits such as no minimum balance requirements and fast redemption times, it also faces challenges like restricted liquidity and higher risk compared to savings accounts. The absence of direct mutual fund plans is a key area that may need attention in near future. But overall, it's advisable for potential users to weigh the benefits against the risks and limitations before planning to go ahead with their decision to use the platform or not.

Please note that this is an opinion blog and not an official research or investment advice. This blog neither encourages nor discourages you from investing in any particular asset class or platform.

We have done more of such interesting company profiles of various platforms, which you can check out here: https://blog.thealtinvestor.in/series/company-profiles

As a debenture holder (especially a retail investor) in any bond that has defaulted, it’s crucial to understand the process that unfolds in such situations.

Today, we write this to walk you through what steps to take, how the voting process will work, and the impact of different voting outcomes governing these scenarios. This information is intended as a general guide applicable to any ISIN/bond series facing a default, so you can be well-informed no matter which specific bond issue you hold. Please do not construe this as any form of advice.

So what’s happening right now?

As of the date of writing this article (12th Aug 2025), TruCap has already made 70% of the payment that was due to investors in different tranches:

• 18 July: 5%

• 21 July: 10%

• 31 July: 5%

• 8 August: 20% and 30%

Note: Catalyst’s report indicates that 15% was paid on July 31, but it seems to be an error.

Now, Debenture holders are supposed to vote for or against enforcement of security. The voting date was 8th August 2025; however, the Debenture Trustee has extended it till 14th August 2025.

What does enforcement of security mean?

Well, TruCap would have pledged certain collateral against the NCDs that were issued. If you as an investor vote for enforcing the security, that means that the Trustee will take legal actions to seize, sell or realize this collateral, and use the proceeds from the sale to repay you and other investors.

Enforcing security has its own pros and cons. Let’s look at them.

Pros of enforcing security

1. If you suspect that the company’s position will worsen with time, enforcement of security can give you a better outcome

2. Enforcement of security ensures that all ISIN holders get equal treatment

3. It could be a relatively faster recovery mode provided the collateral is strong

Cons of enforcing security

1. It’s a lengthy and uncertain process that could take months or even years

2. Legal proceedings may deviate the issuer’s focus from repayment since there will be a lot more compliances and issues to handle

3. Once legal action starts, it’s harder to go back to a cooperative repayment plan. Courts/insolvency processes have their own rigid timelines and priorities.

4. In most cases, it’s a costly affair, because if the cost of enforcing security is more than the Recovery Expense Fund (REF), the additional amount needs to be paid by the debenture holders. Catalyst, for example, has estimated this cost to be around INR 15 lakhs for one ISIN – which will have to be paid by Debenture holders if they choose to proceed with enforcement of security

If the company genuinely has the ability to repay given a bit more time or minor restructuring, it is better to not go ahead with enforcement of security.

In the case of TruCap, for example, the company has already paid 70% of the principal due, and is expecting a round of funding by Marwadi Chandarana Group. They have also shared a revised repayment plan, which they have already started paying ahead of schedule. In such cases, debenture holders should take an informed decision on whether they want to enforce security or not.

How does enforcement of security happen?

Well, the voting process is slightly complex. Here’s how it works:

Any major action by the trustee (like enforcing security) requires approval of a super-majority of investors. SEBI defines “majority of investors” as not less than 75% of the outstanding debt by value and 60% by number of investors (at the ISIN level). In other words, for the trustee to proceed:

• at least 75% of the total outstanding principal amount (of that ISIN) held by those voting must be in favor, and

• those in favor must also constitute at least 60% of the number of debenture holders

There’s a catch here though - According to SEBI’s master circular (para 3.3.6) The majority has to be at an ISIN level. This means:

• Each ISIN is treated as its own, separate decision-making unit.

• For a trustee to proceed with enforcement for a particular ISIN, that ISIN alone must cross the super-majority threshold:

  • 75% of the outstanding value

  • and 60% of the number of holders (both criteria met within that ISIN).

Now, where are investors stuck?

From ALT Investor’s interactions with debenture holders, and meetings with TruCap and Catalyst, it is clear that most of the investors don’t want the enforcement of security to happen right now. However, the challenge is that there is a concept of negative consent when it comes to voting.

This means that the default action is to enforce security, unless the majority votes against enforcement. So unless the super-majority of debenture holders (75% by value AND 60% by number) don’t vote against it (dissent), Catalyst will go ahead with enforcing security.

This is a tricky situation, because in most of the meetings we attended, there were only between 20 and 45 debenture holders present, out of the hundreds of debenture holders of TruCap. The remaining, people are doubting, may not even cast a vote – this may mean no negative consent, which may further lead to Catalyst enforcing the security.

We tried contacting Catalyst to understand how it would work if different ISINs had a different outcome. However, they were unable for comments.

Is there light at the end of the tunnel?

In one of the meetings held on 11th August with Catalyst, debenture holders brought up the point of not being able to get enough votes to avoid enforcement of security. To this, the trustee’s representatives mentioned that even after the voting ends, no action would be taken without a discussion with the debenture holders, and that they would call for a meeting to discuss the next steps.

SEBI’s circular also mentions that if consent is not received, then “the Debenture Trustee shall take further action, if any, as per the decision taken in the meeting of the holders of listed debt securities”

However, this clause is mentioned with regards to consent for enforcement of security AND signing of ICA (Inter-Creditor Agreement), and does not talk about enforcement of security in isolation.

How much the meeting will benefit the debenture holders, only time would tell. But we can assume that the meeting, along with SEBI’s clause, should at least pave the way for a conversation to happen.

What can you do as a debenture holder?

At ALT Investor, we are trying our best to get debenture holders from all ISINs on a common platform. There is a WhatsApp group you can join here so that you can stay updated with everything that is going on. In case you have any questions, please feel free to reach out to us there - our team is part of the group and is working to disseminate information in the best way possible.

Disclaimer: This blog is intended solely for educational purposes and should not be construed as advice. While every effort has been made to ensure factual accuracy, occasional errors or omissions may occur. Readers are encouraged to conduct their own research, and in case of any differences in interpretation, you are welcome to share corrections.

1. The blog introduces alternative investment options that offer potentially higher returns than FDs and also diversification benefits.

2. It highlights various alternative investment options such as corporate bonds, SDIs, fractional real estate, REITs, InvITs, and invoice discounting, explaining their mechanisms, returns, and taxation.

3. Corporate bonds are loans to companies with higher interest rates than FDs, and they can be invested in through SEBI-registered platforms.

4. Fractional real estate and REITs allow investors to own parts of real estate properties, providing rental income and dividends, while InvITs focus on infrastructure projects.

5. The article emphasizes the importance of understanding the risks and rewards of these alternatives, considering factors like minimum investment amounts, expected returns, and taxation implications to make informed investment decisions.

I am sure most of your financial conversations with parents, siblings or friends are often centered around traditional investment options like PPF and Bank FDs, right? Unfortunately, even at a time when we are seeing so many advancements and new ideas in various sectors like defense, technology, healthcare, fintech etc, it's fair to say that even in 2025, most of our money-related conversations still sound like those in the 1970s-80s era.

But wait, why are we suddenly saying all this? Well, let us straightaway address the elephant in the room. It is because of this old-school investment mindset that many investors' portfolios are limited to just FDs.

That is exactly where the role of alternative investments comes into the picture. With more and more regulations and guidelines developing in this segment, the horizon of alternative investments is gradually expanding, you, as an investor, can consider exploring these fixed-income options to go beyond the traditional FDs for your portfolio.

Beyond FDs: Alternative Investment Options That Can Help You Earn Earn Fixed-Income

1. Corporate Bonds

This is perhaps the most popular among the various alternative investment options in India, and the gradual roll out of regulations and guidelines by SEBI and RBI have been further strengthening this segment in recent years.

As per RBI’s Financial Stability Report, India’s overall bond market had already touched ₹226 lakh crore in size (around $2.6 trillion) in FY25, out of which corporate bonds accounted for a quarter of it, with over net outstanding ones being ₹53.6 lakh crore. The rest includes government bonds, treasury bills, and state development loans in India.

But what exactly are corporate bonds? Simply put, corporate bonds are loans that you give to a company in exchange for periodic interest payments and the return of your principal (the money you invested) when the bond matures at the end of the tenure. Interest rates on corporate bonds are generally much higher than fixed deposits of around 3%-7.5%.

You can invest in corporate bonds through SEBI-registered OBPPs (Online Bond Platform Providers) such as Grip Invest, Aspero, Wint Wealth, TheFixedIncome, etc.

Minimum Investment Amount: Rs 1,000

Returns: 9%-14%

Taxation: Rules vary for listed and unlisted bonds.

For listed bonds: STCG taxed as per your tax slab rate (holding period less than 1 year), LTCG taxed at 12.5% (holding period equal to or more than 1 year).

For unlisted bonds: W.e.f. July 23, 2024, all unlisted bonds are treated as short-term assets, regardless of holding period. So, they get taxed as per your applicable slab rate.

Also, 10% TDS on interest earned is levied on both listed and unlisted bonds.

2. SDIs (Securitized Debt Instruments)

Think of Securitized Debt Instruments (SDIs) like mutual funds, but for loans. Banks/NBFCs bundle multiple loans (like home loan, car loan or gold loan) into a single package and sell pieces of this package as tradeable instruments to investors.

Investors earn returns from the loan repayments, thus providing a steady income similar to interest earned on corporate bonds. You can invest in SDIs through SEBI-registered OBPPs like Grip Invest and Jiraaf. Note that in October 2022, Grip Invest had become the first platform to offer an NSE-listed SDI as an investment option in India.

Returns: 12%-15%

Taxation: Tax on interest income is taxed as per your applicable slab rate. TDS of 10% (w.e.f. 1st April 2025) is also deducted.

3. Fractional Real Estate (FRE)

As the name suggests, fractional real estate refers to partial ownership, where investors pool in their capital to invest in a physical property, with the generated rental income getting distributed to the investors in proportion to their original investment.

So basically, the investment mechanism of FREs is just like any other unregulated pooling of funds scheme. The asset management company sets up a SPV (Special Purpose Vehicle) to pool investor's funds. In the case of FREs, the SPV is usually a private limited company or it can be an LLP as well. The investors are given a combination of shares and compulsory convertible debentures (CCDs) in proportion to their investments.

You can start investing in fractional real estate through platforms such as PropertyShare, Claravest, WiseX, Fracspace, etc.

Minimum Investment Amount: Rs 1 lakh-10 lakh

Taxation: Check out this blog in which we had detailed out the various tax rules for fractional real estate:

https://blog.thealtinvestor.in/from-bonds-to-crypto-taxation-rules-for-alternative-investment-platforms#heading-fractional-real-estate-fre-platforms

4. REITs

Real estate investment trusts (REITs) are like mutual funds or ETFs, but for real estate. REITs give investors access to the benefits of owning high-quality real estate assets in small ticket sizes. They are listed on the stock exchanges and investors can buy REIT units just like they would buy shares of any listed company. REITs manage the portfolios of high-value real estate properties and mortgages. For instance, they lease properties and collect rent thereon. The collected rent gets distributed among shareholders as income and dividends later on.

You can start investing in REITs through platforms such as PropertyShare, hBits, Brookfield India ReIT, Mindspace Business Parks REIT, Nexus Select Trust, etc or investment apps like Groww and Zerodha.

Minimum Investment Amount: No minimum investment amount (you can start investing for as low as Rs 100-500 for one unit of the REIT)

Returns: 11%-16%

Taxation: Capital gains tax: STCG (≤12 months): 20%, LTCG (>12 months): 12.5% on gains above ₹1.25 lakh. Interest and rental income are taxed at slab rates, and dividend taxation depends on SPV's tax regime choice. Also, a 10% TDS on interest/rental income is levied if it exceeds ₹10,000.

5. InvITs

InvITs (Infrastructure Investment Trusts), in simple terms, are like specialized or sectoral mutual funds which pool in your money to invest majorly in cash-generating or under-construction infrastructure projects. Here, infrastructure assets can refer to capital-intensive projects such as dams, highways, railway projects, transformers, power grids, etc.

The main objective of InvITs is to open the doors for retail investors to access investment opportunities in infrastructure projects that were previously only available to large institutional investors.

For InvITs specifically, you can invest by buying and selling them in a similar manner to equities, since InvITs are listed on the NSE/BSE, where the units can be traded.

Here’s the list of SEBI-approved InvITs in India: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=20

Minimum Investment Amount: No minimum investment amount (you can start investing for as low as Rs 60-90 for one unit of the InvIT)

Returns: 8%-15%

Taxation: Interest Income taxed as per your applicable slab rate. 10% TDS applies if total interest distributions exceed ₹10,000 in a financial year. Dividend Income (if the underlying SPV has not opted for concessional corporate tax under Section 115BAA), then dividends received by you are exempt; otherwise they are taxable at your slab rate. Also, 10% TDS applies on dividends above ₹10,000 per year

As far as capital gains are concerned, STCG (Holding ≤ 36 months) taxed as per your slab rate, while LTCG (Holding > 36 months) is taxed at 10% without indexation. Also, rental Income is taxed as per your slab rate with 10% TDS beyond ₹10,000 per year.

6. Invoice Discounting

Invoice discounting is a form of short-term borrowing in which a business can receive immediate cash by using its outstanding invoices/unpaid bills on delivered products, as collateral.

The businesses do so to quickly get cash for reasons such as: pay their own suppliers and employees, pay for fulfilment of other orders, or re-invest in the business to maintain growth momentum.

Here’s an example of invoice discounting to help you understand it better:

For example, a ‘company X‘ sold Rs 1 lakh worth of goods to Flipkart on May 5th, 2023, and they are expected to receive the payment in 60 days, i.e. by July 5th, 2023, as per Flipkart's payment cycle.

However, company X is currently facing a cash crunch as it needs to fulfil other ongoing orders, pay its own suppliers and also cover staff salaries. But the payment from Flipkart will take another 60 days, so to solve this cash crunch, company X approaches an invoice discounting platform to get finance against the Flipkart invoice.

The invoice discounting platform showcases this deal on its platform for a fixed rate of return. Investors check out the deal and collectively pool in Rs 90,000 and pay company X, who is satisfied with the arrangement. And then 60 days later, when Flipkart releases the payment to X, they repay the full Rs 1 lakh to investors in proportionate amounts against the Rs 90,000 they invested at a discounted rate against the Rs 1 lakh bill. This arrangement allows investors to earn some decent returns in a short period of time.

But what’s the catch here? Well, firstly, invoice discounting as an investment vehicle itself, is unregulated in India, which means it does not fall under the purview of SEBI or RBI, making it a high risk investment.

You can invest in this alternative investment option through invoice discounting platforms such as altGraaf, Amplio* (Formerly Tyke Invest), BetterInvest, Ultra (Formerly Tap Invest), etc. But always keep in mind that invoice discounting is a high risk product, primarily because of its unregulated nature, and the ‘high returns’ it promises always come with ‘high risks’ as well.

Minimum Investment Amount: Rs 10,000-Rs 25,000

Returns: 10%-15%

Taxation: Returns earned are added to your total income and then taxed as per your slab rate.

*Amplio is offering regulated invoice discounting through its tie-up with an RBI-registered NBFC (Gangabase Barter Pvt. Ltd.)

Conclusion

While traditional investment options like FDs have been a staple in many portfolios, exploring alternative investment options can offer potentially higher returns and diversification benefits.

From corporate bonds and SDIs to fractional real estate, REITs, InvITs, and invoice discounting, each option comes with its own set of risks and rewards. It's crucial for investors to thoroughly research and understand these alternatives, considering factors such as minimum investment amounts, expected returns, and taxation implications. By doing so, investors can make informed decisions that align with their financial goals and risk tolerance, ultimately enhancing their investment portfolios beyond the conventional choices.

Please note that this is an opinion blog and not official research advice. This blog aims to promote informed decision-making and does not encourage or discourage you from investing in any deals, asset classes or platforms.