Now Investing In Corporate Bonds And SDIs Is As Easy As In Stocks: Here’s How

The last time you purchased a stock or a mutual fund - did it ever cross your mind that it may not get credited to your Demat account? Probably not! This is because the Securities and Exchange Board of India (SEBI) and the stock exchanges have put in place secure mechanisms to record and settle every transaction. In fact, every day, 2.82 Cr* trades are settled of INR 86,563* Cr value, all securely and seamlessly with robust mechanisms for investor protection and grievance redressal. 

(*The data is based on August 2023 as per NSE¹and BSE²)

Now imagine all the same protections and convenience for buying fixed-income instruments like corporate bonds and SDIs like LeaseX or LoanX. Welcome to SEBI’s RFQ mechanism offered by Grip! 

Considering the growing investment sentiment towards alternative investments, especially debt instruments like Corporate Bonds, SEBI has taken steps to regulate Online Bond Providing Platforms (OBPP) to enhance investor experience.

Let us understand what constitutes SEBI’s RFQ mechanism, what is changing at Grip, and how it is going to be beneficial for you³. 

Why Should An Investor Be Excited About These Regulatory Changes?

Have you ever wished investing in corporate bonds was as easy and secure as investing in your favourite stock? If yes, welcome to a significant change…The Bond Market was considered an offline, non-transparent, and non-efficient marketplace due to multiple payment steps, delays in securities transfer to the investors’ Demat account, large requirements of initial capital, and the absence of liquidity. 

The Request For Quote (RFQ) system, introduced by SEBI, allows Grip users to buy bonds directly through the NSE or BSE, alleviating present drawbacks and making investing in debt securities accessible to all investors. Here are some of the benefits of migration to the RFQ framework:

• Increased Transparency And Reliability: All securities are now listed, and hence, investments made on Grip are directly facilitated on the stock exchange.
• Increased Convenience: You can now directly transfer the funds for purchase to the exchange via a payment gateway without adding beneficiaries, thus reducing the multiple payment steps while ensuring payment security.
• Reduced Settlement Time: The time taken to reflect securities in your Demat account will be reduced from 2 days to 1 day. 
• No Minimum Investment Criteria: You can now purchase securities in multiples of just 1! No large minimum order quantities for Securitised Debt Instruments (LeaseX, InvoiceX, LoanX, or BondX)!
• Multiple Payment Options: Purchase securities through 3 different payment modes, namely UPI, Net Banking, and NEFT/RTGS, as per your convenience.

What Is Changing For An Investor?

The RFQ integration will boost transaction security, ensuring all investments are directly settled via the stock exchange, with fund and securities transfers managed directly by the exchanges. This integration will enable users to invest small amounts and open up additional payment modes, such as UPI and Net Banking, in addition to NEFT/ RTGS. Three major changes taking place for you as an investor are

1 Time To Receive Securities

Earlier, the time to reflect securities in your Demat account was ‘T+2’. It is now reduced to a single day, making it easier for you to keep track of your transactions. 

2 Payment Options

Now, you can make payments conveniently through three different modes at your convenience. Additionally, earlier, you were required to make payments through an external page redirection while choosing net banking as your preferred payment mode. Now, you can make the transactions without redirecting or logging in to your net banking. The three modes of payment are:

A. UPI

For orders up to INR 1 lacs, you can make the payments using any UPI mode. Although banks and UPI apps may have their own transaction limits, they may also be user-specific. Investors must ensure to use a UPI ID that is linked with a registered bank account only. Otherwise, the payment will be returned to the investor. Using UPI, you can complete your transaction by 4:30 PM on the next working day from the day of order placement.

B. Net Banking

Alternatively, you can make direct payments without any upper limit to NSE’s payment gateway through Net Banking from a registered bank account. However, NSE may charge a nominal gateway fee, depending upon your bank. Using this mode, you can complete your transaction by 4:30 PM on the day of order placement. Currently, it supports payments from the following 17 banks:

C. NEFT/RTGS

The third mode of payment with RFQ is NEFT/RTGS, which can be done from any bank; however, the bank account must be registered with Grip. Payment must be made to the Virtual Account Number as provided by NSE Clearing Ltd. and displayed on Grip's website. Investors must note that the Virtual Account Number contains their PAN at the end. They must verify it before proceeding with the payment.

While using this mode of payment, the investor should mention the exact amount of the transaction up to 2 decimal places, i.e. if the amount payable is 2,34,56.75, then 75 paise must be filled for the order to be a success. 

As per RBI guidelines, RTGS is processed in real-time; however, NEFT is processed in batches every 30 minutes. Therefore, investors must ensure the amount is paid the next day of the transaction to reach NSE Clearing Ltd's account by 4:30 PM. Please note that IMPS is not currently supported for RFQ transactions.

3 Additional KYC

For RFQ changes to be effective, investors must complete a 2-minute additional KYC step. It will enable them to invest in bonds and SDIs with ease. For our existing investors, additional KYC will require verification of pre-filled identity and financial details followed by a selfie and signature verification. You can also change your details if needed. 

Conclusion

Considering the RBI’s pause in increasing the interest rate, there has been an increased interest from market participants to invest in debt securities and benefit from high interest rates. Further, the introduction of RFQ for transactions is a welcoming step from SEBI, keeping in mind investors’ pain points and solutions thereof.

Grip has always been at the forefront of technological advancements to ensure our commitment to being an ‘investor first’ platform. From a seamless customer digital interface to ensuring transparency to enabling access to regulated, curated investment opportunities for you. Visit Grip Invest and discover the latest alternative investment opportunities!

References:

1. National Stock Exchange <https://tinyurl.com/nh9kwdd5> 
2. Bombay Stock Exchange <https://tinyurl.com/36nh23u8>
3. Securities and Exchange Board of India (SEBI) <https://tinyurl.com/kydjz3bv> 

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Disclaimer - Investments in debt securities are subject to risks. Read all the offer-related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading. This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip does not guarantee or assure any return on investments and accepts no liability for the consequences of any actions taken based on the information provided. For more details, please visit https://www.gripinvest.in/. 
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