Beyond Stocks: The Private Credit Boom Shaping India’s Future | CA Rachana Ranade

"We want to create a separate asset class which is high yield bonds. Uh wherein you will get returns in double digits. So these are real returns post tax and post inflation."

"So, you know, I also find it very interesting uh when I came into the bond industry. Even I was very surprised that why this market is not very developed. Correct. Because uh debentures and equity these are two basic instruments. Correct. Even mutual fund is a derivative product. But these are two basic instruments. Absolutely. One instrument has developed a lot. Correct. You have one of the highest valued market in the world, equity market in the world. Whereas your debt market is not really developed."

"And if you'll see what is the size of uh equity market in India, it should be somewhere around 400 plus lakh crores, 425 to 450 lakh crores. And the size of corporate bond market in India is hardly 55 lakh crores."

"and I would say you know uh mutual fund industry what it was 30 years ago or 25 years ago at the same junction we have corporate bond industry in India right now it's growing at a massive space and the regulators are also giving a lot of help to develop this"

"So right now the doors of capital bond market or capital debt market are restricted for smaller players. They don't have access to it."

"We are trying to change it change it into credit underwritten industry. Uh so for example whatever bonds we will try to sell we will first invest into them. We will underwrite it. We will structure it. We will monitor it and then we will uh recover if required. Skin in the game."

"No, definitely bond market I'll say it's the only solution for Indian economy. I'll go to that extent. I'll explain my logic for that."

"So when your money as an investor is directly invested into a business so what happens is employment gets generated. Uh there is production which adds to the GDP. You pay taxes. Those taxes are used for the welfare of the society. So the entire economic cycle starts when you make an investment by way of bonds because the money is directly flowing into businesses."

"So I am really you know very uh bullish when money goes directly into businesses either it's way of IPO. Correct. Correct. Because even if I'm talking about uh stock market and primary markets we have seen a lot of IPOs in the recent past where it's more of an OFS rather than a fresh issue. So even if it's an OFS no money is actually going down in the company where maybe the production capacities may increase production will increase topline will increase profits will increase more employment generation"

"So absolutely if the business fails uh if you're equity investor or a debt investor correct your money will also get lost if the business fails."

"But the only difference is debt holders will get their money before the equity holders. Correct? So at least you know you're slightly covered over there."

"Anything which is above risk-free rate of return risk-free rate of return is what you are earning on government treasury bills. Correct. As you move away from that return which should be somewhere around 6 7%. Correct. Anything that you move away from that, irrespective of the instrument anything above six or 7%. Huh? Yes. Anything that you have above you're going above that the risk is increasing."