New Delhi [India], October 22 (ANI/Digpu): Despite the pandemic's impact on the economy, India's retail investor base has increased, with newer investors looking to grow passive income through a spectrum of investment assets.
By the June Quarter of 2020, retail investors had increased their stake in 1018 NSE-listed companies. Another unique trend that showed up in the quarter is the significant rise of retail investors emerging from small towns.
Improved access to digital investor education has triggered a hunger in newer investors. Investors have begun to proactively understand the range of investment opportunities; they have diversified their investments and explored newer investment avenues.
Tech Enables Access
Technology has been a major game-changer in the investment space. It has empowered investors by making the process transparent, seamless, as well as accessible through smartphones. Digital investment platform GrowFix has now opened up Securitised Debt Instruments (SDIs) to retail investors. Previously they were only available to institutional investors and HNIs (High Networth Individuals).
With GrowFix's offering, retail investors can now invest in SDIs with a minimum ticket of Rs 10,000. GrowFix Gold is a debt asset, which has a pool of gold loans with less than 1.5x collateral as gold.
This asset is garnering interest as it combines the best features of liquid mutual funds and fixed deposits while also delivering higher value.
Low Risk, Higher Returns
Average Liquid mutual funds offer an interest rate of 4 to 6 per cent; however, the risk involved is also higher. On the other hand, fixed deposits are a low-risk instrument. But interest rates have been dwindling over the years, and they come with a fixed lock-in period.
GrowFix's model is unique because it offers a 9 per cent interest rate, is low risk since the asset is hand-picked gold loans from NBFCs, and there is no lock-in period. Moreover, premature withdrawal does not carry any charges, and the asset can be liquidated in 48 hours.
Democratising The SDI Model
The platform, founded by entrepreneurs Ajinkya Kulkarni, Abhik Patel, and Shashank Chimaladari, is based on the securitisation model.
GrowFix purchases a pool of the safest gold loans from NBFCs, which have gold as the collateral. Why is the product low risk? This is because in case of non-repayment from borrowers, the gold used as collateral is liquidated, and investors still get the principal plus interest. However, the asset is not new.
In the financial year 2018-2019, INR 1.9 lakh crores worth of securitisation assets were purchased by institutional investors and HNIs. The key difference is that GrowFix opens up the asset to a whole new generation of investors. GrowFix earns 2 per cent from the NBFC from which the portfolio is purchased while passing on the remaining 9 per cent to its retail investors.
Patel and Kulkarni, both alumnus of IIT Gandhinagar, had a successful exit from their previous start-up CreditPeriod in 2017.
"Indian investors still seek security as well as high returns. This asset offers both. Additionally, we really wanted to democratiseSecuritised Debt Instrument, and GrowFix seamlessly connects these dots," said Abhik Patel shares.
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