The exit strategy renaissance: How liquidity solutions are building retail bond confidence

Time of India

30-07-2025

Greed and fear—psychologists often cite these as the two most fundamental human emotions. They trace their roots to our primal survival instincts, developed when early humans still lived in caves. Yet in today's world, where life is increasingly digital rather than physical, these same instincts continue to guide behaviour—especially in how we invest.
Modern consumers value flexibility. We prefer rides over car ownership, subscriptions over lump-sum purchases, and the ability to exit almost anything—especially investments—at the click of a button. One-day exits are no longer a luxury; they are an expectation.
And who can blame us?
In just the past two decades, this generation has experienced one shock after another: the 2008 Global Financial Crisis, the 2011 Eurozone sovereign debt crisis, the 2015 Chinese stock market crash, India's 2018 NBFC
liquidity
crunch, the global upheaval caused by the COVID-19 pandemic, and ongoing geopolitical tensions, including the Russia-Ukraine and Israel-Hamas conflicts.
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The exit strategy renaissance: How liquidity solutions are building retail bond confidence
India's bond market is undergoing a transformation, becoming more accessible and liquid for retail investors. Key reforms—lower ticket sizes, digital platforms, and retail-only liquidity windows—are boosting participation and trust. Monthly investments have surged, signalling a shift towards bonds as a mainstream, flexible investment option.
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It's no surprise, then, that the world's largest investment asset classes—public equities, currencies, commodities, deposits, and even crypto—are deeply liquid by design. Liquidity wasn't an afterthought; it was the foundation that enabled these markets to scale.
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To put that in perspective: the global market capitalization of public equities is estimated to be over $125 trillion, while private equity remains under $6 trillion. Liquidity doesn't just attract institutional investors; it is a prerequisite for retail participation. For individual investors, whose capital is often hard-earned and limited, the ability to exit is as important as the ability to enter.
India's bond market: From private to public
Until recently, India's bond market was largely inaccessible to
retail investors
. Illiquidity, high ticket sizes, and a lack of transparency kept it in the domain of institutions and ultra-HNIs. But that began to change meaningfully in late 2023 and 2024, thanks to a series of progressive reforms by SEBI. These reforms are laying the groundwork for a more liquid, retail-friendly bond ecosystem.
3 pivotal changes are driving this transformation:
1. Democratized Access
SEBI reduced the minimum investment size in listed
bonds
from Rs 10 lakh to Rs 10,000—a 99% drop. Some issues are now even available in Rs 100 or Rs 1,000 denominations. Broader participation is the first and most important building block of liquidity.
2. Digital Distribution via OBPPs
The introduction of the Online Bond Platform Provider (
OBPP
) framework has enabled licensed fintech platforms to offer bonds with transparency, ease, and low cost. Over 34 entities have secured this license, bringing bonds to the fingertips of everyday investors.
3. Retail-Only Liquidity Windows
A regulatory innovation allows issuers to create buyback windows specifically for retail investors. This is a significant safeguard—providing an exit option without extending the same to institutional holders.
What it means for retail investors
These developments haven't just made bond investing possible for retail investors—they've made it trustworthy. Liquidity was the missing link, and it's being addressed head-on.
Platforms like Grip Invest and Wint Wealth have led the way in creating features that enable users to exit bond positions before maturity. This newfound ability to sell is critical—it aligns the product with modern investor expectations.
As a result, monthly investments by retail investors via OBPPs have surged to approximately Rs 1,000 crore—a 300% increase over the past year (Source: NSE, BSE).
ETMarkets.com
Equally telling: on some OBPPs, sell orders now account for 5% of all transactions. Even more encouraging, 24% of users who've exited a bond are returning to reinvest within three months. This indicates that providing an exit doesn't reduce demand—it enhances long-term participation.
What's next?
In finance, regulatory reform often sparks a virtuous cycle. Lower investment thresholds attract more investors. More investors create deeper markets and enable better price discovery. Better discovery attracts more issuers, and a wider range of bonds further fuels investor interest.
We're at the cusp of such a transformation in India's bond markets.
Liquidity—long considered the Achilles' heel of fixed-income products for retail—may well prove to be the catalyst for a new era. An era where bonds are no longer a private, opaque corner of the capital markets, but a mainstream investment option for the digitally savvy Indian investor.
(The author of the article is Nikhil Aggarwal, Founder & Group CEO, Grip Invest)
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)