Discount on investment in debt market:SEBI’s proposal to offer discounts for women, senior citizens and retail investors on buying bonds

The central government is soon planning to offer discounts to senior citizens, women, and retail investors investing in the debt market. Market regulator Securities and Exchange Board of India (SEBI) issued this discount proposal on Monday. Through this, companies or the government issuing bonds will be able to offer higher interest rates on investment or a discount in the issue price to certain types of investors. What is the debt market, why is the government offering discounts? The debt market is a market where companies or the government issue bonds to borrow money. For example, Gold Bonds. But the problem with this market is that people invest less here, especially in the secondary market where old bonds are bought and sold. When liquidity is low, it becomes difficult to sell bonds. SEBI’s plan is for issuers (companies) to give incentives to some investors, such as cashback or fee concessions. This will increase the participation of retail investors in the debt market. Incentive can be received as cashback or discount SEBI’s proposal states that issuers can give incentives to those who buy long-duration bonds (which are for 5-10 years). For example, cashback (money back), discount on fees (lower charges), or other benefits. However, this discount will only be available to investors who buy bonds for the first time. If they later sell these bonds to someone else, that buyer will not receive this discount or higher interest. Currently, under SEBI rules, a company issuing bonds or any person associated with it cannot offer any kind of reward or discount.