Chennai, March 16 

Online debt marketplace CredAvenue CEO, Gaurav Kumar, on Wednesday said that the Indian debt market will witness a lot of growth in retail participation in the next 2-3 years, and this, in turn will bring down the entry ticket size for investors in privately placed debts.

Kumar was responding to audience questions at an exclusive plenary session at the CII Southern Region Annual Meeting 2021-22.

“Our fixed income platform distributes roughly over ₹2,000 crore of debt every month to retail investors. Today, the entire volume goes to high net-worth individuals (HNIs) because SEBI, in its right wisdom, has set a floor value of ₹10-lakh to retail investors in the private placement market. The market regulator does not want retail investors to lose money in debt,” Kumar said. 

He added that the regulator has done the right thing by setting a floor price since retail investors primarily invest their lifetime savings in debt and a lot of fixed income products often get mis-sold to marginal investors for a commission.

“My view is that it (debt market) will start opening up more and more in the next 2-3 years and you will see the ticket size coming down as retail participation in the fixed income market goes up,” he added. 

Accessing debt

CredAvenue is an online debt arranging platform which helps businesses and enterprises secure debt from lenders. Founded in 2020, the Chennai-based startup last week became the fastest Indian fintech startup to join the unicorn club after raising $137 million in a Series B financing.

For the current year, CredAvenue has set a debt financing target of ₹52,000 crore.

“Today, 92 per cent of debt in this country goes only to 16 per cent of enterprises, which means if their rating is low or AA category, access to capital is very very limited. If an enterprise goes down further, they will not have access to credit unless there is a platform to enable them access to credit,” Kumar said. 

Noting that enterprises in remote areas of the country still access debt from informal sources, Kumar, said,  access to finance is not only about the ability to tap funding but also about getting finance with the right terms.

He also added that India’s debt-GDP ratio is only at 50 per cent as compared to developed economies like China, which has a ratio of 125 per cent and that there is a huge headroom for growth in the credit market. 

“From macro level to enterprise level as well as individual level, debt will transform our innate potential if we channelise it in the right way,” Kumar added.