Corporate bonds and other fixed-income products are emerging as attractive alternatives, supported by improving market access, regulatory reforms, and growing retail participation.
In an interaction with ETMarkets’ Kshitij Anand, Nikhil Aggarwal, Founder & Group CEO of Grip Invest, explains why India’s bond market is at an inflection point, how retail investors are moving up the risk-return curve, what makes corporate bonds an attractive option today, and the key factors investors should evaluate before chasing higher yields. Following are the edited excerpts from the chat:
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) Honestly, this shift has been building for a while – the rate moderation is just the moment it’s become impossible to ignore. When FD rates were sitting comfortably above 6.5-7%, most retail investors didn’t feel the need to look elsewhere. That comfort is fading. Banks are beginning to transmit rate cuts, and the real return on an FD, once you adjust for taxes and inflation starts looking quite thin.
As fixed deposit rates decline, Indian investors are increasingly exploring corporate bonds for better post-tax returns. This shift, driven by improving market access and regulatory reforms, is causing retail participation in bonds to surge. Experts highlight that while higher yields signal greater risk, careful evaluation of credit ratings, issuer health, and liquidity is crucial for informed investment decisions in this evolving fixed-income landscape.
What we’re seeing now is investors moving up the risk-return curve, but thoughtfully. Corporate bonds, especially in the AA to A segment, are offering spreads that genuinely compensate for the incremental credit risk. In Apr’26, retail investors (ticket sizes below ₹50 lakh) invested ₹4,389 Cr in bonds – nearly 2.5x the volume recorded in the same month last year.
The issuance pipeline reflects this momentum as well. In CY 2025, corporate bond issuances reached $128 Bn, nearly 2 times compared to 2020. That’s not a blip; that’s structural demand meeting structural supply.
The interesting part is who is driving the demand. It’s not just HNIs or family offices anymore. We’re seeing first-time bond investors from tier-2 and tier-3 cities as well, investors who had never looked beyond a bank deposit, entering this space. That, to me, is the real story of this moment.
Q) Industry data suggests retail participation on online bond platforms has grown sharply in recent years. Please share numbers. How has your platform grown?
A) The numbers across the industry have been encouraging, and I think they reflect something real – not just marketing momentum. We’ve seen roughly 140% year-on-year growth in retail participation in bonds broadly based on Apr’26 data. These aren’t Grip-specific numbers – this is the market finding its feet.
At Grip specifically, we’ve built a base that spans investors across 8,000-plus pin codes. What started as a platform for sophisticated urban investors has quietly become a mainstream fixed-income destination.
Our investors range from salaried professionals putting in ₹10,000 to business owners managing multi-crore fixed-income portfolios – and the product experience is designed to work equally well for both.
Q) Do you believe India is witnessing the “financialization of fixed income” similar to what happened in equities over the past decade?
A) Yes – and I’d say we’re roughly at the 2012-13 moment of equities, if the analogy holds. The mutual fund industry famously took off after SEBI’s reforms, the launch of SIPs as a concept for mass retail with ‘Mutual Fund Sahi Hai’, and sustained investor education. Fixed income is at a similar inflection.
The regulatory scaffolding is in place – SEBI’s reforms on online bond platforms, reduction in face value minimums, better disclosure norms – and now the behavioral shift is happening. OBPP Association in India recently launched an education campaign on Bonds with ‘Bonds – Ek Sashakt Bandhan’.
The equity financialization story was, at its core, about two things: access and trust. People couldn’t invest in stocks easily, and even when they could, they didn’t feel safe doing it without an intermediary they trusted. Bond investing had the same twin problem. The minimum ticket sizes were prohibitive, the information asymmetry between institutional and retail investors was enormous, and there was no easy way to hold or transact.
That’s changed. And when access improves and trust builds – and we’re seeing both happen simultaneously – participation tends to compound fast. India’s bond market is already at $2.8 trillion in valuation. The retail slice of that is still small relative to what it will be five years from now. We’re not predicting the future here – we’re watching it happen quarter by quarter.
Q) A common market observation is that the highest yields often signal the highest risks. How should retail investors differentiate between attractive yields and red flags?
A) This is one of the most important questions in fixed income, and the answer is less complicated than people expect – but it does require some discipline.
The first thing to understand is what a yield premium actually represents. When a BBB-rated issuer offers 12-13% while an AA issuer is at 9-10%, that 300 bps spread is the market’s estimate of default probability and liquidity risk.
The question a retail investor should ask is: am I equipped to price that risk? Also an investor should align their fixed return investment with maturity timeline and investment goals.
A few practical filters we’d suggest: Start with the credit rating – not as an absolute truth, but as a baseline. Look at the issuer’s interest coverage ratio – can the company comfortably service its debt from operating cash flows? Check concentration risk – is this issuer heavily dependent on a single geography, product, or revenue source?
And finally, check liquidity – can you exit this bond if you need to, and at what cost? The red flags are usually hiding in plain sight. An unknown issuer offering yields 500+ bps above government securities, short track records, absent or thin credit ratings, and low secondary market liquidity – any one of these warrants caution, multiple together should be a hard stop.
Grip Invest provides investors with a transparent view of each issuer’s financial health, enabling informed investment decisions.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)