So I bought some muthoot bonds from Paytm Money that expires on 12 of this month 1 months back. The amount I invested was 9865 and I was supposed to get 10,000 on the bonds automatic redemption
Now that redemption has happened I got 9500 only in my bank account. Cannot see where the 500 went and did not get any kind of email communication from either muthoot or Paytm Money.
What must have happened? I contacted Paytm Money but they are just responding with Copy Pasted Faq Response.
Even the bonds Last traded value was higher than What i have got
Wow. Sorry if this sounds rude, but this is a classic case of why you should not be buying bonds in secondary market, if you don’t fully understand them. There are lot of nuances associated with bonds, and this new age platforms offering bonds directly to Retails without necessary context has worsened the problem.
Had to do some digging, and I think this is what happened
I think the bond you bought was INE414G08314.
I looked up the prospectus and this is what I found (imp sections highlighted)
Long story short, this bond had differential interest rate (and hence redemption price) for Retail and Institutional investor
When Muthoot issued this bond, if retail had bought it only then redemption prices would have been Rs. 2000, else only 1900 per bond.
I think what you bought was tagged as Category 1, and hence you only got Rs. 1900 back per bond.
And paytm Money without understanding all this, simply put up redemption price as 10K, and mouth watering ROI of 1.32% for a month luring retail investors into buying this bonds.
Frankly, last traded value has no real significance on redemption price.
If people are willing to buy at high price, LTP will keep on going high
Here, seems like lot of retails got lured into buying this due to wrong info, and some institutions made money out of it
Luckily for you, loss are small. I would say small price to pay for important lesson in bond trading.
Thanks a ton now this makes a lot of sense. Also you were not at all rude but helpfull. This was just me trying to see if money can be made using bonds . Frankly this loss is insignificant to me, but is there something/somewhere i can complain about paytm money for this ? this is a classic case of false advertisement.
Once again thanks a lot for your detailed response! Kudos!
Umm, maybe try putting it on Twitter. Tag Paytm Money CEO - sridharvarun. He is pretty active there.
I am not sure what can be actually done, but it might create some awareness and Paytm might mend their ways.
How do you go about finding the prospectus based on ISIN/some bond details? Is there a centralized place to find prospectus with the details you have highlighted?
My experience with Paytm Money bond platform has also been patchy at the best, littered with false/misleading information. E.g. “Ask Rate” which could be mistaken for YTM for long dated bonds (10+ year Gsec bonds) could be found well north of 7.6% many a times when 10 year is quoted around 7.3%. They can and obviously hide behind the fact that “Ask Rate” is not YTM. When asked for calculations, the template response is that “Ask Rate” is determined by quoted prices (whatever that means).
Unfortunately no. There is no centralized place for this.
I generally rely on this site for figuring out basics about an ISIN, as a starting point. https://www.indiabondinfo.nsdl.com/
But then, for info., especially prospectus and all, easiest place to look would be company website offering the bonds.
Most NBFC have well maintained repositories of bonds issued by them.
PSU issuer are generally most difficult from inf point of view.
For govt bonds and SDL, I generally rely on RBI press releases.
