As fixed deposit rates begin to soften following the RBI's rate-cut cycle, investors are increasingly looking beyond traditional savings instruments in search of better risk-adjusted returns.According to BondScanner Founder & CEO Nishchay Nath, high-rated PSU and corporate bonds are emerging as attractive alternatives, aided by improving retail access, regulatory reforms and greater transparency.In this edition of ETMarkets Smart Talk, Nath discusses the growing financialization of fixed income in India, why bonds are gradually becoming a mainstream investment option, and the key factors investors should evaluate before chasing higher yields.
Edited Excerpts –Q) As fixed deposit rates moderate, many investors are moving towards bonds and alternative fixed-income products.
How do you see the trend taking shape?A) The shift which is taking place is both real and gradual.
After the RBI's December cut, the repo rate has settled at 5.25%, and the large banks have followed, with most offering high retail FD rates.Investors who have traditionally parked money in FDs, are slowly discovering that an AAA-rated PSU or a well-rated corporate bond can offer a meaningfully better yield for a comparable risk profile, with the added benefit of locking in today's rate for a longer tenure.What has changed structurally is access, as a few years ago this was an institutional conversation but today retail investors can compare yields, ratings and maturities and invest accordingly.The moderation in FD rates is the trigger and the OBPP framework is what enables people to act on it.Q) Industry data suggests retail participation on online bond platforms has grown sharply in recent years.
