The latest launch follows the Securities and Exchange Board of India's (Sebi) new policy that reduced the minimum investment amount of MLDs to INR one lakh starting January 2023.

InCred Money, a retail wealth-tech arm of India’s financial service firm InCred Group, has listed a second market-linked debenture (MLD) on its platform as the South Asia country’s equities continued to rally.

India is on a growth path in terms of wealth where GDP per capita is increasing [...] you’re seeing a lot more people interested in wealth management solutions - Vijay Kuppa

The InCred 1.5x Nifty Accelerator MLD, issued by InCred Financial Services Limited this month, offers a participation of 1.5x on the upside performance of India’s benchmark index, the Nifty 50 Index, capped at 33%. The 26-month product provides 100% principal protection.

The timing coincided with the Securities and Exchange Board of India’s (Sebi) reduced denomination for debt securities and non-convertible redeemable preference shares, which includes MLD. The circular from the Sebi issued in October 2022 stated the change of the minimum investment amount from INR 10 lakhs to INR one lakh starting January 2023, allowing more investors beyond institutional access to the market.

While the MLD market used to target private wealth investors with the product’s high ticket size nature, the new regulatory enablement has prompted issuers to broaden product offerings to more retail investors, according to Vijay Kuppa (pictured), CEO of InCred Money.

“India is on a growth path in terms of wealth where GDP per capita is increasing,” Kuppa told SRP. “You’re seeing a lot more people interested in wealth management solutions. [Besides that massive market], we are trying to use technology and offer a lot of these [MLD] products to the mass retail.”

The latest MLD launch at InCred Money also came after its first MLD that links to the Nifty 50 debuted in August 2023, also with a minimum ticket size of INR one lakh. The first product has collected INR 25 crores (US$3m) in sales, according to him. InCred Money is the liquidity provider.

A lot of Indian investors take deposits or real estate as the main source of investment because some are scared and think they could get into a loss [in the stock market] - Vijay Kuppa

Kuppa highlighted that the idea of designing 100% principal protection meant to provide a starter for investors across the board due to the historically low participation of Indians who have exposure in the stock market

“A lot of Indian investors take deposits or real estate as the main source of investment because some are scared and think they could get into a loss [in the stock market],” he said. “This [MLD] product could be a great entry point for them, at least there’s a principal-protected safe [net].”

The timing coincided with the booming of India’s equity market, with its blue-chip Nifty 50 index representing India’s top 50 companies soaring nearly 13% over the past six months. On Wednesday alone (21 February), it hit a fresh all-time high of 22,249.40 before slightly retreating on Thursday.

In 2023, SRP database registered 11 MLDs listed on Bombay Stock Exchange by eight financial institutions led by Abans Finance (4 products), followed by Kinara Capital (1), Arman Financial Services (1), Edel Land (1), Oxyzo Financial Services (1), Edelweiss Alternative Asset Advisors (1), Poonawalla Fincorp (1), and Kotak Mahindra Investments (1), translating a plunge from 175 products issued in 2022.

All of which offer 100% capital protection. Among, seven of which are linked to Indian government bonds, while the rest four products are on the back of a single equity index, covering the S&P BSE Sensex and the Nifty 50 Index.