With digitization, each and every sector undergo advancement. There is no surprise that there are big players who keep an interest in the finance domain and are emerging with new innovations in the industry. That’s how the Fintech players come into play!
Back in time brokers or banks used to take care of the investment of an individual, but over the years it isn’t the same anymore. As we can witness the emergence of online platforms that are giving investors an opportunity to easily participate without hassle.
If it isn’t for such online platform providers, to this date, personal financial investments would have got harder than ever. Let’s understand what OBPP means in the article.
What does OBPP Stand for?
OBPP means Online Bond Platform Provider, which has an online platform for Bonds so that an investor could browse through the available bonds and make an investment decision seeing all the parameters that need to be assessed and compared before a purchase.
It’s just like an online platform for Equity Market, where the investors can directly invest in the stocks they wish to and make a transaction to anticipate the returns without a broker or a bank in between.
The point to be noted is that the online platform providers must be SEBI registered, thus it allows the investor to rely on and trust the process of making the investment. Alongside these platforms makes it very accessible for investors to undergo an investment by themselves.
The current status of the financial market
How does Online Bond Platform Provider work?
OBPPs have carved a niche for themselves by primarily offering listed bonds that are renowned for their safety. These bonds are often favored by risk-averse investors looking to diversify their portfolios and achieve stable returns. But what exactly sets OBPPs apart from traditional investment avenues? Let’s explore the key aspects of investing through these platforms.
The First Step: Opening an Account
To start with the investment process in an OBPP, the first requirement is an active demat account. This ensures that your investment transactions are seamless and electronically managed. With a Demat account in place, you’re ready to make the bond investments.
KYC: The Foundation of Trust
Just like any reputable financial institution, OBPPs adhere to Know Your Customer (KYC) norms. This step is crucial in establishing trust and compliance with regulatory standards. Signing up and completing the KYC process is essential to begin your investment journey on these platforms.
The Transaction Process: Behind the Scenes
One intriguing facet of OBPPs is that they don’t directly handle investor funds. Instead, they act as intermediaries, helping you in the end-to-end process of bond investment. When you invest in bonds through an OBPP, the invested amount is transferred to the bank account of entities like ICCL/NSCCL, the settlement authorities. This ensures a secure and transparent flow of funds.
The psychology of investors that may be irrational
From Bonds to Demat: A Seamless Transition
As the funds are securely transferred, the purchased bond units find their way into your demat account. This process not only safeguards your investments but also streamlines the management of your bond portfolio.
Returns and Maturity: Directly to your Bank Account
One of the most appealing features of investing through OBPPs is the convenience of returns. Interest payments from the bonds are directly credited to your bank account by the issuer. Similarly, upon maturity, the face value of the bonds is credited to your bank account. This hassle-free process eliminates the need for multiple intermediaries and ensures that you receive your returns promptly.
OBPPs are more than a Transaction Platform
OBPPs go beyond being mere transaction platforms. They provide investors with detailed pages for each bond, offering comprehensive information and product notes. This empowers investors to make decisions by understanding the features and potential risks associated with each bond.
Diversity in Investment Options
One of the standout features of OBPPs is the array of bond options (listed) they present. From bond public issues to private placements, the options are diverse and tailored to cater to varying risk appetites.
Investors can explore Government Securities (G-Secs), State Development Loans (SDLs), Sovereign Gold Bonds (SGBs), and even bonds from Public Sector Undertakings (PSUs).
End Thoughts
The global fixed-income market as of 2022 is worth $129.8 trillion and equity in 2022 is worth $101.2 trillion. The data is evident that the Bond market is much larger than the Stock market. The gap between the stock market and the bond market signifies the weakness in the stock market due to fallen prices. Although not many don’t understand the importance of bond investment in the financial journey, it is the safest haven with respect to the risk factor that any instrument carries comparatively. With that, the role of an OBPP is crucial in seasoning the investors toward a hassle-free and smooth investment journey for beginners as well as seasoned investors.
This advancement had to be a part of the Indian Bond Market to educate, set the stage and promote safer investments. Having both ICCL and NSCCL actively working on resolving the risk associated with the settlements, and with further advancements in such platforms can serve the customers more effectively than how it was previously.
