As mentioned earlier, the transaction sizes in the wholesale debt market are so large that individual investors can’t participate in it. So there is a separate market called the retail debt market for individual investors. But the retail investors don’t have much of a choice as far as investment in the debt market is concerned. Following are some of the instruments in the retail debt market:

Public issues of debt by corporates: The corporates make public issues of the debt they want to raise from the market. The individual investors can invest in these issues. These issues also include the issues made by the FIs to raise money from the public.

Deposits of banks: Maximum amounts of retail savings in India go in to the deposits of banks. Banks accept deposits from the public and pay interest on them. These deposits are secure and liquid but they don’t carry attractive yields.

Mutual Funds: Since the retail investors can’t participate in the wholesale debt market, it can invest in this market via mutual funds. The mutual funds accumulate individual savings from the investors and invest them in these markets. The best example of such type of MFs is a money market mutual fund.

Insurance companies and provident funds: Just like mutual funds, these also mobilize individual savings and invest them in wholesale debt market and other attractive investment avenues.

Fixed deposits of companies: This presents a very attractive investment avenue with reasonable yields but here the risk of default is very high. The recent NBFC episode is a case in point, where a lot of NBFCs took money from people and vanished. One should look at the financial performance of that particular company and the previous history of deposits and their repayments before investing in such deposits.