The Sebi wrench in Wint Wealth’s online bond trading plans

Startups like Wint Wealth and others are bringing the usually-opaque bond market to India’s retail investors. But bonds are risky, and unlisted ones offered by these startups, even more so. The regulator has now turned its eye on the sector

Nearly a dozen online bond trading platforms mushroomed during the pandemic, making the most of investors looking to beat high inflation and low returns on bank fixed deposits

But they operate in a regulatory vacuum. Many do not comply with Sebi’s KYC requirements, and some offer bonds considered too risky for retail investors

The regulator is now all set to throw the rule-book at these platforms, recommending multiple guardrails and a tight squeeze on the product offerings

Platforms like Wint Wealth that depend significantly on ‘unlisted bonds’ sales could take a knock and be forced to change. Most experts see the rules as short-term pain, long-term gain

In January, Ajinkya Kulkarni, chief executive (CEO) and co-founder of online bond trading platform Wint Wealth, tweeted tweeted Twitter Ajinkya finfluencer tweet Read more this eye-catcher.

Getting the whos-who of India’s finfluencer finfluencer The Ken Sebi loopholes, bull run gave financial influencers wings… Read more world to act as its brand ambassadors brand ambassadors Livemint Wint Wealth raises undisclosed round from celebrity finfluencers Read more in exchange for equity stakes was a coup of sorts. The Bengaluru-based company is only two-years-old—practically a greenhorn.

And yet, it wouldn’t be the first time that Wint Wealth pulled off a surprise. In early 2021, the company raised money in its first seed funding round from another set of whos-who in India’s fintech space—Nithin Kamath, co-founder of online trading startup Zerodha; Kunal Shah, co-founder of credit card payments startup CRED; Praveen Jadhav, former CEO of payments behemoth Paytm, among others.

The company specialises in bonds, a type of debt security in which the buyer “lends” to the company issuing the bond. Bonds are risky—if the issuer defaults, investors lose money. “If even one company defaults on the debt taken, the trust of the retail investor will be lost for good. Instant gratification will not help in this business. Good businesses take time to develop,” says Ankit Gupta, founder and director of Mumbai-based bond trading platform BondsIndia.

It’s the reason why India’s ~Rs 40,00,000 crore (~$500 billion) bond market has been largely restricted to institutions and high-net worth individuals (HNIs)—entities that can afford to swallow the risk. Businesses continue to borrow mostly from banks banks The Hindu BusinessLine Corporate loan growth turns positive in FY22 Read more rather than from the bond market bond market The Economic Times Fund raising via debt placement hits 6-yr low at Rs 5.88 lakh cr in FY22 Read more , and most individual investors stick to the safety of bank fixed deposits ( FDs FDs Outlook Mutual Funds In India Yet To Find Wider Acceptance, Fixed Deposits Still Rule: Report Read more ) over other financial instruments.

AUTHOR

Anand Kalyanaraman

A qualified Chartered Accountant, Anand chose to pack the power of numbers with words when he left a career of seven years in accounting, putting together MIS reports, and investment research to enter journalism. Before joining The Ken, Anand was Deputy Editor at The Hindu BusinessLine, a newspaper he worked at for 11 years.

View Full Profile

The only business subscription you need

Unrivaled analysis and powerful stories about businesses in India and Southeast Asia from award-winning journalists. Includes access to longform articles, premium newsletters across a range of topics depending on your interest and our top-ranked podcast. For those who want to be prepared for what comes next.

So much journalism in India is superficial.

Articles are generic, almost cookie-cutter in their approach. And they don’t provide enough context on the issues they cover. The Ken is different. I don’t always agree with everything they say but I appreciate their commitment to publishing deeply reported narratives and investigations. Their reporters find new ways to analyze tech among other industries. And that’s always worth a read.

Sid Talwar / Co-Founder and Partner / Lightbox Venture Capital

As entrepreneurs, we thrive on being in the know at all times.

A personal subscription to The Ken was a no brainer. But as startup founders, this isn't enough. Team members also need to be in the know, for everyone handles customer-facing responsibilities and an ecosystem change that impacts customers also impacts us

Kiran Jonnalagadda / Co-founder / HasGeek and Internet Freedom Foundation