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Business Standard
2 days ago
- Business
- Business Standard
Fat paycheck, fatter EMI? Some home loan mistakes to avoid at all costs
A Bengaluru-based Reddit user recently shared how he feels financially suffocated after taking a Rs 1.2 crore home loan, despite earning Rs 2.2 lakh a month. While his EMI is Rs 75,000, the real struggle lies in everything that follows- family expenses, lack of liquidity, and zero mental peace. Experts say this case, though extreme, is far from rare. Many high earners overcommit to large home loans too early and end up 'asset-rich, cash-poor.' According to experts, here is a breakdown of the key mistakes the Reddit user likely made and what others should keep in mind before signing on a big loan. Thinking high income means high affordability 'He earns Rs 2.2 lakh, but Rs 75,000 EMI already eats up 34 per cent of his income,' says Vineet Agrawal, co-founder, Jiraaf. 'Factor in rent-like maintenance, bills, dependents, and basic savings and you're suddenly tight.' Manish Goel, managing director of Equentis Wealth, notes a behavioural pattern. 'Young earners often spend aggressively on lifestyle, car EMIs, and risky investments. This crowding out of savings leads to chronic liquidity strain.' Taking a Rs 1.2 crore home loan too early in life At 30–35, committing to a 20-year EMI removes flexibility. 'This is a decade where goals shift, marriage, children, job changes,' says Vijendra Singh Shekhawat, chartered accountant & chief executive officer at Choice Finserv. 'A Rs 1.2 crore loan at 7.9 per cent means nearly Rs 1 crore in interest over 20 years unless you prepay.' Agrawal adds, 'With rising living costs, even a Rs 2 lakh salary doesn't mean you are loan-ready. Ideally, home ownership should follow, not precede, financial foundation.' Trusting loan approvals as a green signal Banks may approve loans where EMI is up to 50–60 per cent of net salary. But that doesn't mean you can afford it. 'Approval is based on income and credit, not your entire financial picture,' says Amar Ranu, head of products & insights at Anand Rathi Share and Stock Broker. Shekhawat agrees. 'Lenders don't factor your family obligations, insurance gaps, or investment goals. Responsibility lies with the borrower to self-assess.' No pre-loan emergency or insurance planning Many first-time borrowers skip creating a buffer. 'If you're committing Rs 75,000 every month, you need an emergency fund of at least 6–12 months of expenses,' says Ranjit Jha, chief executive officer of Rurash Financials. Agrawal also recommends locking in term life and health insurance before any big loan. 'It is not optional. If something happens, your family gets stuck with the burden.' Planning to prepay without a strategy The Redditor mentions wanting to close the loan in 5–7 years. But experts say aggressive prepayment should be done only after building emergency funds and securing long-term investments. 'People start dumping bonuses into loans and stop SIPs, that's not sustainable,' says Goel. 'You can repay faster, but only if your financial ratios stay healthy.' Jha suggests a hybrid route: 'Keep investing, and use bonuses or annual hikes for partial prepayments. That way, you cut tenure without choking cash flow.' Checklist: Are you really loan-ready? Before signing up for any large home loan, ensure you: · Keep EMI below 30–35 per cent of your take-home · Have 6–12 months of expenses saved as an emergency fund · Continue investing monthly (don't stop SIPs) · Have term insurance equal to the loan amount · Carry comprehensive health insurance · Use realistic income estimates, not CTC The bottom line: A home should bring security, not stress 'Buying a house is aspirational, but it shouldn't come at the cost of your mental and financial peace,' says Agrawal. "Plan first, buy later." You may qualify for a big loan. But whether you can comfortably live with it is an entirely different question.
Economic Times
3 days ago
- Business
- Economic Times
Retail investors start to warm up to corporate bonds post SEBI reforms: Grip's Nikhil Aggarwal
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Markets 1. India's ESG bond market picks up as global and domestic push align: Vineet Agrawal of Jiraaf Tired of too many ads? Remove Ads India's fixed income landscape is undergoing a silent transformation. Once dominated by institutions and high-net-worth individuals, the corporate bond market is now beginning to attract the attention of retail investors — thanks in large part to recent regulatory reforms by Aggarwal, Founder & Group CEO of Grip, explains how measures such as the reduction in minimum ticket sizes, improved transparency, and digital access are driving wider traditional instruments like FDs lose their edge, retail investors are finally exploring corporate bonds for better yield, safety, and diversification. Edited Excerpts –A) The current decrease in interest rates is increasing the appeal of bond issuances for government entities and companies to raise are increasingly turning to the bond market, with a higher preference for short-term bonds, as banks have been slow in passing on previous rate to a primary database, corporations issued ₹61,200 crore in in up to five-year bonds in May 2025, which is about three times the amount of money raised for the same period in May periods of declining interest rates in India have seen a surge in bond issuances. For instance, in 2020-2021, when RBI cut rates aggressively, corporate bond issuances rose to record levels as issuers locked in lower borrowing to statistics from Prime Database, Indian companies raised ₹987 Bn ($11.68 billion) through bond sales in April 2025, attracted by the relative comfort of the local markets and alluring interest rates. That was the highest on record for the first month of a financial market broadly anticipates that the Reserve Bank of India (RBI) will reduce policy rates further in the coming months, as inflation remains issuance is anticipated to be further stimulated by lower rates, which will also increase the value of existing bonds with greater yields, thereby benefiting investors through capital appreciation.A) Corporate bond issuance in India is expected to see a significant increase in the coming quarters, driven by a series of recent and anticipated rate cuts by the its continuous attempts to boost economic recovery and revive credit demand, the RBI has enacted a number of repo rate cuts in 2025, including a 25-basis point cut in April that brought the rate down to 6.00%, following an earlier cut in February. This is lowering the borrowing costs for inflation cools and monetary policy turns accommodative, more corporates are tapping the bond market to refinance existing high-cost debt, fund capex and working capital needs. In FY25, companies raised over ₹9.9 Trillion through corporate bonds, reaching a record with strong liquidity and investor interest for higher-yielding products, market circumstances may be quite supportive of increased primary bond activity in the coming quarters.A) With the recent interest rate cuts, the short-term secured bonds have grown in popularity among investors. Short-term bonds expiring within five years accounted for more than half of the new bond-securitised debt issued in May, up from one-third in April.5 Following factors can be attributed driving this trend:a. Rate cut anticipation: Companies are opting for shorter maturity bonds to avoid locking in at current rates in the anticipation of rate cuts when cheaper financing could be available.b. Liquidity Infusion: Since late 2024, the RBI's actions to increase banking system liquidity have primarily benefited non-banking financial companies (NBFCs), allowing them to borrow more through short-term bonds.c. Yield Advantage: Short-term secured bonds now yield much more (up to 80 basis points) than similar government securities, making them appealing to businesses and investors.d. Hedging Against Uncertainty: As the long-term interest rate trajectory and macroeconomic environment remain unpredictable, issuers and investors choose short-term instruments.e. Flexible Funding: Short-term bonds provide for quick refinancing or bridge funding without tying in money for an extended period.A) Till 2023 this market saw limited participation from retail investors with 99.5% of the market being driven by institutional investors. The primary barrier being a minimum investment amount of INR 10 institutional investors still dominate the short-term corporate bond space, retail participation is gradually increasing. Recent regulatory changes by SEBI in 2023 have transformed the fixed income investment landscape, making it far more accessible and attractive for retail Excluding transaction sizes greater than 50L (which could indicatively fall into institutional transactions)• Low Minimum Investment Amount: Minimum investment thresholds were significantly reduced, with most listed bonds now accessible for ₹10,000 with some bonds also available at ₹1,000, encouraging broader participation.• Greater Transparency: Issuers are now subject to stricter credit rating and disclosure norms, empowering investors to make well-informed decisions using independent reports.• Secure Settlements: All investments are enabled only via the stock exchange with T+1 settlement in the clients' demat accounts.• Enhanced Liquidity for Clients: Introduction of demat settlements via exchanges has increased liquidity, allowing investors to exit investments more easily.• Tax Incentives: TDS on bonds has been exempted up to ₹10,000 annually per issuer.A) The green bond market has experienced significant growth in the last several years, with positive year-over-year growth every year since 20118. In 2024, globally, the green bonds market achieves record levels of issuance and outperformed the conventional bond market by close to 2%.In India, the momentum picked up after SEBI issued green bond guidelines in 2017. The Government of India began issuing Sovereign Green Bonds (SGrBs) in FY 2022-23, raising a total of ₹57,697 crore through FY mutual funds, banks, and insurance companies are increasingly integrating ESG considerations into their portfolios, driven by regulatory encouragement and global best are also drawn by the dual promise of measurable social, environmental impact and financial stability provided by SEBI's strict disclosure and verification renewable energy leaders (Azure Power, ReNew, Adani Green, etc.) have issued green bonds, and others are entering the sustainability bond recent introduction of SEBI's ESG and sustainability-linked bond framework is expected to unlock new capital-raising opportunities across a range of following categories of issuers are especially well-positioned to benefit from and drive this evolving market:a. Infrastructure and Construction: Companies engaged in large-scale infrastructure projects such as urban transport systems, highways, smart cities, water supply, and sanitation are strong candidates for ESG or sustainability-linked bond issuances.b. Renewable Energy and Clean Technology: Firms operating in solar, wind, hydro, bioenergy, energy storage, and electric mobility stand to benefit the most. These sectors directly contribute to India's Nationally Determined Contributions (NDCs) and net-zero targets, making them ideal for green bond issuance.c. Affordable Housing, Healthcare, and Social Infrastructure: Issuers involved in building affordable housing, healthcare facilities, sanitation, education infrastructure, and gender-focused programs are natural fits for social bonds and sustainability-linked instruments.d. Financial Services (BFSI): Banks and non-banking financial companies with established ESG policies are well-positioned to issue ESG bonds or serve as intermediaries, channeling funds to underlying green and social projects.e. Large Listed Corporates: Publicly listed companies already complying with SEBI's Business Responsibility and Sustainability Reporting (BRSR) requirements particularly those in the top 1,000 listed entities are better equipped to meet the data, disclosure, and governance demands of ESG bonds.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
3 days ago
- Business
- Time of India
Indian rupee, bond markets cautious in week dominated by Fed, tariffs
The Indian rupee and government bonds will react to a host of cues this week, including a U.S. Federal Reserve policy decision and the August 1 reciprocal tariff deadline, which is likely to keep traders cautious. The rupee closed at 86.5150 against the U.S. dollar on Friday, down 0.4% on the week, as foreign portfolio outflows and uncertainty over a U.S.-India trade agreement kept sentiment tepid. Explore courses from Top Institutes in Please select course: Select a Course Category Data Analytics others PGDM CXO Cybersecurity Project Management Healthcare Product Management Leadership Digital Marketing Operations Management Public Policy Degree Data Science Artificial Intelligence Technology Management Finance MBA Data Science Design Thinking MCA healthcare Others Skills you'll gain: Data Analysis & Visualization Predictive Analytics & Machine Learning Business Intelligence & Data-Driven Decision Making Analytics Strategy & Implementation Duration: 12 Weeks Indian School of Business Applied Business Analytics Starts on Jun 13, 2024 Get Details While the Fed is widely expected to keep rates unchanged on Wednesday, investors will pay close attention to commentary from Fed Chair Powell to gauge the outlook for U.S. policy rates. Bonds Corner Powered By Indian rupee, bond markets cautious in week dominated by Fed, tariffs This week, the Indian rupee and government bonds are set to respond to various factors. These include the U.S. Federal Reserve's policy decision and the August 1 tariff deadline. Traders are likely to be cautious. Investors will closely monitor Fed Chair Powell's comments. Data on the U.S. labor market and inflation will also be key. EM debt hedge funds play safe amid rally India's ESG bond market picks up as global and domestic push align: Vineet Agrawal of Jiraaf 10 year yield spikes amid a decline in bets on August rate cut German bond yields hit four-month highs, bets wane on ECB cuts Browse all Bonds News with "As long as the jobs picture holds up, firmer inflation may well delay the restart of the Fed easing cycle and provide the dollar with a lift this summer," ING said in a note. Later in the week, data on the U.S. labour market will be in focus alongside an inflation print to gauge how tariffs are affecting the world's largest economy. Live Events Meanwhile, the deadline to strike trade deals with the U.S. elapses on August 1. Over the weekend, the United States and the European Union announced a deal, which will result in a 15% tariff on EU goods, half what Trump had threatened to impose from August 1. Japan and the European Union have reached agreements with U.S., alongside others such as Indonesia and Vietnam, even as India's negotiations have appeared to run into roadblocks over key sectors such as dairy and agriculture. Traders reckon that the rupee will continue to hold a slightly bearish bias and hover in a 86.30-87 range in the near term. Heightened risk of "news-led price action" should prompt speculators to keep positions small with tight stop-losses, a trader at a foreign bank said. Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield, which settled last week at 6.3505%, is expected to move in a range of 6.31% to 6.38%. Apart from the Fed guidance, focus will also remain on expectations about any potential rate cut in the RBI's upcoming policy decision, due on August 6. A plunge in India's retail inflation to a more-than-six-year low in June, along with expectations that it will slip to a record low in July, has led to increased talks of a rate cut, with some even expecting action next week. The central bank slashed its key interest rate by a steeper-than-expected 50 bps last month and changed its policy stance to "neutral" from "accommodative", which had fueled speculation that the rate cut cycle may be over. Banks will also gauge the liquidity situation and movement in overnight rates after a volatile last week, which saw rates rising beyond the Marginal Standing Facility rate. Foreign investors have been on the buying side, with net purchases of over 100 billion rupees in the last five weeks, as bets of at least one more rate cut have risen. India's fundamental story remains intact. Inflation is under control and fiscal health is in check, and India is one of the large benchmark weights within the JPMorgan emerging market debt index , said Jean‑Charles Sambor, head of emerging markets debt at TT International Asset Management. "We think that fundamentals will remain very attractive for foreign investors." KEY EVENTS: India ** June fiscal deficit - July 28, Monday (3:30 p.m. IST) ** June industrial output - July 28, Monday (4:00 p.m. IST)(Reuters poll - 2.4%) ** July HSBC manufacturing PMI - August 1, Friday (10:30 a.m.) U.S. ** July consumer confidence - July 29, Tuesday (7:30 p.m. IST) ** April-June GDP advance - July 30, Wednesday (6:00 p.m. IST) ** Federal Reserve monetary policy decision - July 30, Wednesday (11:30 p.m. IST)(Reuters poll - rates unchanged) ** Initial weekly jobless claims for week to July 21 - July 31, Thursday (6:00 p.m. IST) ** June personal consumption expenditure index, core PCE index - July 31, Thursday (6:00 p.m. IST) ** July non-farm payrolls and unemployment rate - August 1, Friday (6:00 p.m. IST) ** July S&P Global manufacturing PMI final - August 1, Friday (7:15 p.m. IST) ** July ISM manufacturing PMI - August 1, Friday (7:30 p.m. IST) ** July U Mich sentiment final - August 1, Friday (7:30 p.m. IST)
Time of India
3 days ago
- Business
- Time of India
EM debt hedge funds play safe amid rally
"It is very hard to predict what they will do next with tariffs, and on top of that you have ongoing wars," Efstathiou said. Emerging-market debt hedge funds, boasting impressive double-digit returns this year, are strategically mitigating risks amidst a deepening rally. Funds are swapping longer-maturity bonds for shorter-dated ones, prioritizing higher-rated, liquid securities, and increasing cash reserves. This cautious approach addresses uncertainties stemming from US policies, global conflicts, and tight pricing, while still seeking selective opportunities for further gains. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Markets 1. India's ESG bond market picks up as global and domestic push align: Vineet Agrawal of Jiraaf Hedge funds dedicated to emerging-market debt are increasingly turning to risk-mitigating strategies to ensure they lock in double digit gains as a broad rally in developing nation assets a banner first half of the year, hedge funds targeting EM debt have returned nearly 13% on an annual basis-more than their peers positioned in any other asset class, according to data based on Bloomberg latest global financial flows data shows the asset class remains thriving and the extra yield investors demand to hold the sovereign debt of developing nations over US Treasuries just hit a 15-year low. Such tight pricing, along with uncertainty over US policies and global conflicts, is pushing hedge funds to curb risks as they ride the historic rally. The funds do this by swapping longer-maturity bonds in their portfolios for less risky shorter-dated ones. They also focus on higher-rated debt and the most-liquid securities while keeping an ample cash pile."Do you just want to be massively long on credit on these valuations? I'd say probably not," said Anthony Kettle, who co-manages BlueBay Emerging Market Unconstrained Bond Fund with Polina Kurdyavko and Brent David. "Having a little bit of dry powder evidently makes sense, and also running elevated cash levels."To be clear, Kettle said, there's still a "decent environment" to gain additional returns as funds become more selective and can profit from both rising and falling asset prices, unlike index-based investors. The $784-million BlueBay fund has returned 17% over the past 12 have taken advantage of EM inflows stoked by increased interest for alternative assets amid US policy unpredictability, which has also weakened the dollar. While many developing countries have come out of distressed debt levels as sentiment improved, further risks include another Iran-Israel flare up and potential additional increases in US tariffs, including on the buyers of Russian Donald Trump's administration has caused a "breakdown of the traditional safe haven correlations" by shaking up the post-Cold War world order, creating an "unusual and unpredictable" environment, said Demetris Efstathiou, the chief investment officer of Blue Diagonal EM Fixed Income Fund."It is very hard to predict what they will do next with tariffs, and on top of that you have ongoing wars," Efstathiou said.
Economic Times
5 days ago
- Business
- Economic Times
India's ESG bond market picks up as global and domestic push align: Vineet Agrawal of Jiraaf
India's ESG bond market is gaining strong momentum as global sustainability trends align with supportive domestic policies and regulatory frameworks. ADVERTISEMENT In an exclusive interaction with ETMarkets, Vineet Agrawal, Co-Founder of Jiraaf, highlights how the convergence of rising global investor appetite for green assets and India's policy-driven push—including SEBI's BRSR Core and the RBI's green finance guidelines—is accelerating the growth of ESG bond issuance. With sectors like renewable energy, clean transportation, and infrastructure finance leading the charge, Agrawal believes that ESG-linked financing is rapidly becoming mainstream for Indian corporates looking to align capital raising with sustainability goals. Edited Excerpts – A) Rate cut cycles have typically triggered higher corporate bond issuance in India, as lower borrowing costs incentivise companies to raise capital more aggressively. This trend has been evident in recent FY25, issuance touched a record ₹10 trillion—a 28% jump over the previous year. The momentum has continued into FY26, with ₹2.6 trillion raised in the first quarter alone. ADVERTISEMENT The strong showing, amidst speculation of further rate cuts, reflects how issuers are anticipating a softer rate environment while responding to healthy investor demand. A) Yes, bond issuance is likely to remain strong in the quarters ahead. Historically, borrowers have front-loaded issuance to benefit from lower yields ahead of rate cuts, and we're already seeing that pattern play out. ADVERTISEMENT With inflation moderating and the RBI expected to further ease policy in the upcoming policy review, the backdrop is supportive. NBFCs, infrastructure companies, and large PSUs are expected to lead the supply, supported by ample liquidity and tightening credit record ₹10 trillion raised in FY25 suggests that this is not just a cyclical spike, but part of a broader, deeper development of India's corporate bond market. ADVERTISEMENT A) Several factors contribute to the rise in short-term issuances, particularly those in the 3–18 month range. First, a flatter yield curve has narrowed the benefit of borrowing long-term, prompting issuers to go short and refinance with rate cuts on the horizon, companies are avoiding locking in higher long-term rates at this time. ADVERTISEMENT ICRA data indicate a notable rise in sub-three-year bonds, particularly from NBFCs and housing finance the demand side, treasury desks, family offices, and short-duration debt funds are actively seeking quality short-term paper, driving this momentum. A) Institutional investors—such as banks, mutual funds, and insurance firms—still dominate the short-term bond retail interest is gradually picking up, primarily through SEBI-registered Online Bond Platform Providers (OBPPs). These platforms have made it easier for individual investors to access short-term, rated bonds in smaller ticket ESG bond market is gaining momentum, fuelled by rising global investor interest in sustainable assets and supportive domestic pushes, such as SEBI's BRSR Core and the RBI's green finance guidelines, have also played a role. Sectors such as renewable energy, clean transportation, and infrastructure finance are leading the way.A notable milestone was L&T's ₹500 crore ESG bond—its first—highlighting that even large conglomerates are aligning with sustainability-linked financing. As ESG considerations become mainstream, more Indian corporates are expected to follow suit. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
