Financial Literacy – Your Most Powerful (and Missing) Life Skill

Posted on February 16, 2026February 19, 2026 by Auburn Solutions

Financial Literacy – Your Most Powerful (and Missing) Life Skill

By 2035, Gen Z will have a 50% share in total consumption spending in India, amounting to nearly $2 trillion USD, according to a study by Snap Inc. and the Boston Consulting Group (BCG). This is both thrilling and terrifying. Thrilling because, as the report puts it, they will become a formidable economic power, the most dominant among all others, such as Gen X, Millennials, and Gen Alpha. And terrifying, because only about 30% of Indians in the 18 to 29 age group are financially literate, according to a 2019 study by NCFE. Without proper financial literacy skills, this power can easily shape a future of stress, anxiety, and a debt trap. This is not a hypothetical fear. A study conducted by Arta Finance confirms this, which states that around 30% of Gen Z report that financial issues are their primary source of stress.

The dark side of social media, EMI schemes, and BNPL transactions

The BCG study (as referenced above) reports that, for Gen Z, change is an opportunity for growth. Over 70% of Gen Z look forward to ‘NEW.’ From new styles to new looks, and from new tech to new experiences. They see change as an opportunity to celebrate. While embracing change can’t be a reason to blame Gen Z, how they handle their money in effecting this change is indeed worrisome.

Whether to buy Coldplay concert tickets or iPhones, Gen Z wants to have it all. Social media has greatly influenced this behavior. A Gen Zer feels constant pressure to keep up with online trends, also known as ‘flexing’. And the urge to flex is so strong that, when they don’t have the means, they borrow. Take a look at this news article, which states that 70% of iPhones in India are purchased through loans. Or this article, which mentions how a small BNPL transaction of rupees 5000 spiraled into a rupees 4.2 lakh debt.

This is not a blog about blaming Gen Z for being reckless with their money. After all, they grew up in an era of the internet, cheap data, easy credit, and on-demand entertainment. So, I can understand that, in a way, they have been pushed into it. However, the core issue here is the lack of basic financial literacy skills.

We often misunderstand financial literacy as complex knowledge of the stock market. In reality, it’s about the basics – of saving, budgeting, understanding credit, investing, etc. These basic skills will help you understand that the average annual interest rate on a credit card debt is around 45%. Basic financial literacy will also help you realise that if you continue making minimum payments, this may temporarily prevent you from being marked as a defaulter. Still, as interest continues to compound, the financial burden will push you into a downward spiral.

Financial Literacy Course for Bharat

The first and best step you can take is to educate yourself to become financially literate. There is plenty of content available on this topic. But I strongly recommend starting with the “Financial Literacy Course for Bharat” offered by the NISM eLearning.

Here is the direct link to enroll: Financial Literacy Course for Bharat

It’s a comprehensive 22-hour online course that lets you learn anytime, from anywhere. It covers everything from money management and budgeting to debt, investing, and long-term planning. And the best part? It’s free and includes a certificate.

Apart from this course, the SEBI (Securities and Exchange Board of India) and NISM (National Institute of Securities Markets) conduct the National Financial Literacy Quiz (NFLQ), a premier nationwide competition designed for undergraduate and postgraduate students to showcase their knowledge of financial literacy and securities markets. NFLQ 2026 is currently underway.

Take this course. Participate in NFLQ. Talk to your friends about it.

Author: Sandeep K. Biswal, Deputy General Manager-CCC, NISM

Fueling ‘Yuva Shakti’ through Strategic Skilling and Capacity Building

Posted on February 12, 2026February 12, 2026 by Auburn Solutions

The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, marks a watershed moment in India’s economic narrative. Dubbed the “Yuva Shakti Budget,” it pivots from traditional infrastructure-led spending toward a sophisticated, outcome-oriented model of human capital development. Young adults, aged 18 to 35, now form a key demographic in India, accounting for a population of over 470 million. This budget has chosen to look beyond numbers and sets out a clear and actionable strategy to transform India’s demographic dividend into a globally competitive asset.

The budget outlines an ambitious vision to position India as a global services powerhouse. While software has historically been our flagship export, the government is now steering the economy toward a 10% global share in services by 2047. The Union Budget proposes to set up a High-Powered ‘Education to Employment and Enterprise’ Standing Committee to recommend measures that focus on the services sector as a core driver of Viksit Bharat. The Committee will prioritise areas to optimize the potential for growth, employment, and exports. They will also assess the impact of emerging technologies, including AI, on jobs and skill requirements and propose measures thereof. The need of the hour today is to bridge the gap between classroom learning and corporate boardrooms. The ‘Education to Employment and Enterprise’ Standing Committee will help in creating a seamless transition from academic curricula to job-market readiness and in aligning education with industry. It will also proactively evaluate the impact of AI and emerging technologies on job roles to recommend real-time upskilling measures and ensure that Indian youth move from being technology consumers to technology creators.

The budget identifies specific high-manpower and high-tech sectors that will act as engines for hiring. By focusing on niche yet globally relevant skills, the government aims to revive hiring sentiment across the board. Some of the initiatives announced relate to training 1.5 lakh geriatric caregivers and 1 lakh allied health professionals, establishing labs in 15,000 schools and 500 colleges to boost the “Orange Economy,” and focused training in chip design, fabrication, and AI data infrastructure. The budget proposes the setting up of a Centre of Excellence in Artificial Intelligence for Education to drive innovation in AI-based learning tools, adaptive learning platforms, virtual labs, and classroom technologies for both schools and higher education institutions. By integrating AI-driven learning and fostering a culture of enterprise, the government is ensuring that “Yuva Shakti” remains the primary driver of Viksit Bharat.

To me, therefore, this budget is not just about financial outlays; it is about creating a generation of leaders, innovators, and creators who are ready for the global stage. NISM’s purpose of capacity creation and skill development aligns very closely with this underlying theme of Budget 2026.

How Budget 2026 changes Sovereign Gold Bond (SGB) taxation?

Posted on February 11, 2026February 13, 2026 by Auburn Solutions

The Budget 2026 brought a huge setback for the Sovereign Gold Bond (SGB) investors.

Before Budget 2026, all redemptions of SGBs with RBI (premature redemption or maturity) were not considered transfer and hence the gains were not taxable.

Now, that has changed. The Budget 2026 proposes to limit this tax exemption only for those bonds bought at the time of primary issuance and held continuously for 8 years until maturity.

In this post, let us see how this change affects you and if there is anything you can do to save on capital gains taxes from these bonds.

What are changed for Sovereign Gold Bonds?

Before Budget 2026, any gains from the “redemption” of Sovereign gold bonds were exempt from tax. You can redeem bonds with RBI in 2 ways.

At the time of bond maturity (8 years). OR
During pre-mature redemption windows. Pre-mature redemption window was available to investors from the end of the 5^th year (since the bond issuance) at six-month intervals. At the time of coupon (interest) payment.

This was irrespective of how you purchased the bond. At the time of primary issuance (when the RBI first issued the gold bond). Or in the secondary market.

Now, the rule has been modified.

Going forward, the capital gains will be exempt from tax only if:

You bought the gold bond at the time of primary issuance. AND
Held the bond for 8 years (until maturity). Redeeming with the RBI during premature withdrawal window will not help.

Both the conditions must be met for gains to be exempt from tax.

Capital gains will be taxable if

You bought the gold bonds in the secondary market. This is irrespective of whether you sell in the secondary market, redeem during premature withdrawal window or hold until maturity.
You sold the gold bonds in the secondary market, irrespective of whether you bought during primary issuance or from the secondary market. This was always taxable.
You bought during primary issuance and redeemed during premature withdrawal window.

Primary issuance means “directly from RBI”. You bought when RBI initially issued the bond. You applied as you do for an IPO.

Secondary market means “buying on exchanges through your broker”. You must have placed a buy bid just like you do when you buy stocks.

https://x.com/deepeshraghaw/status/2017938768372871581?s=20

Can I do something before April 1, 2026, to avoid paying taxes?

#1 If you bought SGBs during primary issuance, you do not have to worry. You can avoid paying taxes by simply holding the bonds until maturity.

#2 Selling your SGBs on the secondary market before April 1, 2026, won’t help save taxes. Because sales in the secondary markets are taxable even now. At your marginal tax rate for holding period < 1 year. At 12.5% for holding period > 1 year.

Yes, if your SGB is trading at a sharp premium, you can benefit from price deviation by selling in the secondary market. But you will not get any tax benefit and capital gains will be taxed.

#3 Buying SGBs in the secondary market won’t help either. Why? Because if you buy SGB in the secondary market, you have no way out. Your gains on maturity, redemption during premature withdrawal window, or secondary market sales will be taxed as capital gains.

#4 As I see, the only SGBs (that were bought in the secondary market) that are still exempt from capital gains are those:

Are maturing before April 1, 2026, OR
That have premature withdrawal window available before April 1, 2026, and you redeem those bonds with RBI during this window before April 1, 2026

*The Section 47 of the Income Tax Act, 1961 and Section 70 of the Income Tax Act, 2025 make no distinction between premature redemption and redemption on maturity. OR how the gold bonds were purchased (primary issuance or secondary market). Hence, any redemption with RBI should be exempt from taxes. The amendment to Section 70 (brought in Budget 2026) removes the tax-exemption for premature withdrawals or for secondary market purchases. However, this amended clause comes into effect from April 1, 2026. Therefore, any premature withdrawal made before April 1, 2026, should be exempt from taxes too, even if you bought in the secondary market.

Section 70 (Transactions not regarded as Transfer) Clause 1(x)
Before Budget 2026	Amended to
of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an individual	by way of redemption, of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015 or any subsequent Sovereign Gold Bond Scheme, if held by an individual from the date of original issue till maturity

However, there is spanner in the works. In the FAQs on Budget 2026 issued by the Income Tax department, I found the following on Page no. 54 of this FAQ document.

Q.4 Will the exemption under section 70(1)(x) of the Income-tax Act, 2025 apply to Sovereign Gold Bonds acquired through secondary market transactions?

Ans: No, the exemption shall not apply to Sovereign Gold Bonds acquired through transfer or purchase in the secondary market. The exemption is restricted to bonds subscribed to by an individual at the time of original issue. This was also clarified by the Department of Economic Affairs in its OM dated 06.12.2022.

Q.5 Will this exemption be available in cases of premature redemption of Sovereign Gold Bonds?

Ans: No, the exemption shall apply only where the Sovereign Gold Bond is held continuously until redemption on maturity. Premature redemption, even after completion of the prescribed lock-in period, shall not be eligible for exemption.

With this response, it seems that the Income Tax Department gave this clarification (that secondary market purchases are not exempt from tax) over 3 years ago. I could not find the aforementioned memo online. In any case, my understanding is that an internal memo of the Department of Economic Affairs cannot override an act passed by the Parliament of India.

Note: This is a complex tax issue. I am not a tax expert. Please consult your tax advisor before acting.

Which SGBs have premature redemption windows before April 1, 2026?

If you go by my assessment that premature redemption (for secondary market purchases) is still exempt before April 1, 2026, the next question is which are those SGBs that have premature redemption window before April 1, 2026.

For such SGBs, you can exercise the option of premature redemption and avoid paying taxes (even if you bought in the secondary market).

Only 4 SGBs have such windows available. Information source: NSDL

SGB issue	ISIN	Bond Maturity	Coupon Payment Date	Dates of submitting premature redemption request
SGB 2020-21 SERIES VI	IN0020200195	September 2028	March 7	Feb 5, 2026, to Feb 25, 2026
SGB 2020-21 SERIES XII	IN0020200427	March 2029	March 9	Feb 6, 2026, to Feb 27, 2026
SGB 2019-20 SERIES X	IN0020190552	March 2028	March 11	Feb 7, 2026, to March 2, 2026
SGB 2019-20 Series IV	IN0020190115	September 2027	March 17	Feb 13, 2026, to March 7, 2026

Hence, if you have bought any of the above 4 bonds from the secondary market, this could be your chance to avoid paying taxes on gains from these bonds.

https://x.com/deepeshraghaw/status/2017951540305342496?s=20

You can use capital losses to set off capital gains

If you have capital losses from sale of any asset, then you can use such capital loss to set off capital gains from sale/redemption of Sovereign gold bonds.

This article was originally published in Personal Finance Plan.

Author: Deepesh Raghaw, SEBI Registered Investment Advisor and Founder of PersonalFinancePlan.in

Disclaimer: I am NOT a tax expert. Please consult a Chartered Accountant or your taxadvisor before acting on the contents of this post.

Disclaimer: Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market is subject tomarket risks. Read all the related documents carefully before investing.

This post is for education purposes alone and is NOT investment advice. This is not a recommendation to invest or NOT invest in any product. The securities, instruments, or indices quoted are for illustration only and are not recommendatory. My views may be biased, and I may choose not to focus on aspects that you consider important. Your financial goals may be different. You may have a different risk profile. You may be in a different life stage than I am in. Hence, you must NOT base your investment decisions based on my writing. There is no one-size-fits-all solution in investments. What may be a good investment for certain investors may NOT be good for others. And vice versa. Therefore, read and understand the product terms and conditions and consider your risk profile, requirements, and suitability before investing in any investment product or following an investment approach.

Retirement planning: the under-estimated risks, and how to deal

Posted on January 29, 2026February 13, 2026 by Auburn Solutions

Volatility risk is well known, but that is usually less dangerous

Retirees fear market volatility, and volatility is a risk flagged by financial planners, provided you are taking professional inputs. However, volatility risk is not as dangerous – we will discuss why. The bigger risks are (a) Sequence-of-returns risk (a potent one) (b) Longevity risk (living too long) and (c) Inflation risk (the silent destroyer). We will also look at how to address these risks.

Volatility risk

Returns from market-based investments are not like a bank deposit, it does not move in a straight line. When you are checking your portfolio report, one fine morning, your returns may look much lower than when you last checked it. In this context, equity is a high-risk asset i.e. volatility is relatively higher. Fixed income or debt is relatively less risky, as returns are more stable than equity. It is advisable that retirees do a proper balance between equity and debt in the investment portfolio, and this approach is well known. We mentioned earlier, volatility risk is not as dangerous. The reason is, market moves in cycles. Down cycles recover over a period of time – the time period for recovery would be different. Volatility risk can be managed through allocation to various investment assets i.e. equity, debt, gold, etc.

Sequence risk

Sequence risk, also known as sequence of returns risk, is the danger that experiencing poor investment returns in the early years of retirement, combined with ongoing portfolio withdrawals for living expenses, will significantly increase the chance of running out of money prematurely. This risk is particularly impactful during the first five to ten years of retirement because withdrawals may lead to sale of assets at lower-than-principal prices (i.e. at a loss), permanently reducing the principal available to benefit from potential future market recoveries.

In the accumulation phase (working years), market downturns can be an opportunity to buy assets at lower prices (rupee-cost averaging). In retirement, the dynamic reverses; withdrawals during a bear market leads to “rupee-cost ravaging,” where more shares are sold to meet the required cash flow, making it difficult for the portfolio to recover. Two retirees with the same starting portfolio and the same average annual return over 30 years can have vastly different outcomes based purely on the order in which those returns occur. The one who experiences losses in the first five years is at a much higher risk of portfolio depletion and may run out of money. To put in perspective, volatility hurts investors emotionally; sequence risk hurts retirees mathematically.

How to deal with sequencing risk? Build a cash reserve/bucket strategy: Set aside one to three years’ worth of living expenses in safe, liquid assets like Bank Deposits or Liquid Funds. This buffer allows you to cover expenses during market downturns without selling investments at a loss, giving the portfolio time to recover. We mentioned portfolio allocation earlier; you have to take care of this in the consolidation phase, which is towards the end of your accumulation phase (working years), before retirement. Consolidation implies having a proper balance between equity, debt and gold (in financial form). When one asset market is not doing well, say equity or debt or gold, you can withdraw from the other.

Longevity risk

A retired person may have an approach “I don’t want to die with unused money.” If your children are well settled and earning well, you need not leave a legacy from your hard-earned money. However, longevity risk is outliving your capital i.e. savings kitty. Longevity risk is growing because of (a) rising life expectancy (b) better healthcare and (c) your spouse may live longer.

How to deal with longevity risk? When you are planning for the golden phase of your life – while doing the excel calculations – put a number higher than you are likely to live. You’re not planning for an extreme outcome – you’re planning for a statistically likely one. Having said that, doing that excel on financial planning is not as easy as everyone’s job, it is more of a professional job. This is another pointer that you require professional inputs for your financial planning.

Inflation risk

Why retirees underestimate inflation risk? Inflation feels low year-to-year – it is measured as how much prices went up over one year, but compounds brutally over decades. Medical inflation often exceeds headline consumer inflation (CPI). Fixed pensions lose relevance over time due to inflation. For a perspective, if inflation rate is say 5 percent per year, purchasing power will halve in approx. 14 years. The calculation is simple: divide 72 by the inflation number you have in mind.

How to deal with it? Need not over-prepare, this is inevitable. The usual solution given by financial planners is that equity returns beat inflation over a long time frame and bank deposits (particularly net of taxation) does not beat inflation. This is correct. However, your allocation to equity, debt, gold etc should be appropriate as per your risk appetite and objectives.

What should retirees do?

You may take care of these aspects in your retirement planning:

Bucketed or layered portfolios: near-term expenses in low volatility assets (e.g. Liquid Funds / Debt Funds) and growth assets (e.g. equity) untouched during bad years;
Lower initial withdrawal expectations: 3.5 – 4.5 percent instead of rule-of-thumb 6 to 7% per year. You should have something in Liquid Funds or Bank Deposits in the initial years, to address sequence risk;
Have some equity in the portfolio, relatively on the lower side since you are a senior citizen now, for the long term. It is an inflation hedge, not a growth luxury.

Conclusion

Most retirees obsess over market volatility because it is visible and immediate. The risks that actually break retirement plans operate quietly – poor timing of returns, living longer than expected, and steadily rising costs. By the time these risks become visible, it is often too late to fix them. The guidance discussed above may help.

Article originally published in The Hindu

Author: Mr. Joydeep Sen, Corporate Trainer, Columnist

NISM – Commitment to Capacity Building and Investor Education

Posted on January 21, 2026January 22, 2026 by Auburn Solutions

For NISM, 2025 was defined by a renewed commitment to capacity building and investor education. Anchored by our mandate from the Securities and Exchange Board of India, NISM’s initiatives in education, capacity building, certification, and financial literacy continue to enhance the quality of market participants.

In 2025, we reintroduced two of our flagship on-campus programs – the Post Graduate Diploma in Management (Securities Markets) and the LL.M. (Investment & Securities Law). Our ongoing 1-year Post-Graduate Program in Investments and Securities Markets, and 15-month Post-Graduate Program in Securities Market (PM/AI/RA), continued to be much sought after.

We stepped up our professional training and capacity-building initiatives in 2025. Management Development Programs, advanced workshops, and leadership programs for market infrastructure institutions, intermediaries, and government stakeholders were curated to enhance the operational and regulatory understanding of a wide cross-section of participants. To cater to the increasing demand from market participants for digital offerings, we have developed a portfolio of 36 Skill Development Modules and 27 eLearning courses, covering almost every facet of the securities market. These courses are now being offered on the iGOT Karmayogi platform and the SWAYAM Plus portal, thus extending their reach even further.

NISM takes its role of maintaining high standards of competence and conduct among market professionals very seriously. To this end, we have significantly expanded our certification ecosystem and our engagement in Continuous Professional Education. We have upgraded our testing platform and our LMS platform, expanded our test centre coverage, and increased our testing capacity to cater to over 500,000 candidates annually.

Investor education and financial literacy are core to NISM’s mission. In 2025, we rolled out many initiatives to foster greater investor awareness. These include investor awareness sessions, the National Financial Literacy Quiz, webinars with market experts, and the NISM Masterclass series. We have also partnered with over 500 higher education institutions to connect with India’s youth.

At NISM, we are committed to nurturing the next generation of market professionals and informed investors. We are grateful to our partners, our students, the market participants, and the wider investment community, whose continued engagement and support make our work at NISM more meaningful and impactful.

On behalf of the NISM community, I wish you a productive, secure, and prosperous 2026.

Author: Shri. Sashi Krishnan, Director NISM

The Critical Need for Robust AML/CFT Framework

Posted on January 21, 2026January 21, 2026 by Auburn Solutions

The threats of money laundering (ML) and terrorist financing (TF) have grown exponentially due to the increasingly interconnected nature of the global financial landscape. These illicit activities severely impact the economy by causing distortions and eroding trust in financial markets and institutions.

In dynamic ecosystems like the International Financial Services Centre (IFSC), Gift City, India and India’s securities market, a robust AML/CFT framework is essential. Specifically, the IFSC ecosystem faces heightened exposure to ML and TF risks due to increased cross-border transactions, global investor participation, and multi-currency operations.

AML and CFT policies are primarily derived from the 40 recommendations issued by the Financial Action Task Force (FATF), which was established by the G7 nations in 1989.

India, as a member of the FATF and the Asia/Pacific Group on Money Laundering (APG), implements these international standards through various domestic frameworks:

The Prevention of Money Laundering Act (PMLA), 2002.
SEBI’s AML guidelines.
The compliance framework mandated by the International Financial Services Centres Authority (IFSCA).

Core Pillars of AML/CFT Compliance

The international framework focuses on several key components that institutions must adopt:

Risk-Based Approach (RBA): Financial institutions must proactively identify and assess their specific ML/TF risks.
Customer Due Diligence (CDD): This includes adhering to proper Know Your Customer (KYC) norms and verifying the beneficial ownership of accounts.
Record Keeping and Reporting: Institutions are mandated to timely report suspicious transactions to national financial intelligence units, which in India is the FIU-IND.
International Cooperation: Collaboration between global agencies and countries is crucial for fighting cross-border financial crime.

Strengthening Capacity: The NISM Certification Initiative

To strengthen professional capacity and promote ethical compliance, the National Institute of Securities Markets (NISM) has introduced dedicated Certification Examinations focused on AML and CFT in the Securities Market and the IFSC Ecosystem. This initiative is pivotal for aligning India’s financial systems with international best practices and enhancing awareness among market participants.

The key objectives of these certifications, targeting professionals such as fund managers, brokers, compliance officers, and intermediaries, include:

Enhance Understanding of AML/CFT Frameworks: Covering Indian laws, FATF standards, and IFSCA guidelines.
Promote Compliance Culture: Empowering professionals to effectively implement AML controls, conduct due diligence, and report suspicious activities.
Develop Risk Awareness: Educating participants on how to identify vulnerabilities and mitigate risks in both domestic and cross-border transactions.
Align with Global Standards: Ensuring the Indian securities and IFSC ecosystem maintains parity with global AML/CFT expectations.

Details of the examinations are available on the NISM website www.nism.ac.in

Author : Mitu Bharadwaj, DGM, CCC, NISM

How much risk is hidden in your CAGR?

Posted on January 20, 2026January 20, 2026 by Auburn Solutions

One thing we all love is speed. We love it when groceries are delivered in 10 minutes, we want to reach our destinations faster, and, of course, we want to grow our wealth faster through higher returns.

“Nobody wants to get rich slowly,” Warren Buffett once said. I think about this often.

In our cars, we have a speedometer that tells us exactly how fast we are going. While it shows our accurate speed, it fails to show us how much additional risk we take on as we accelerate.

Let’s look at the math of a 50km drive on a highway.

Speed (km/h)	Time Taken (min)	Time Saved	Risk Level
40	75	—	Low
60	50	25 min	Moderate
80	37.5	12.5 min	Manageable
100	30	7.5 min	Elevated
120	25	5 min	High
140	21.4	3.6 min	Lethal

Notice how the incremental time saved becomes negligible compared to the surge in risk:

Accelerating from 40 to 60 km/h saves a significant 25 minutes (High utility).
Accelerating from 60 to 80 km/h saves another 12.5 minutes (Moderate utility).
However, pushing from 120 to 140 km/h is drastically more dangerous.

At that speed, your braking distance has increased significantly, your margin for error is nearly zero, and a small pothole can become a life-threatening event.

All this risk for what? To arrive just 3 minutes and 36 seconds earlier??

Your portfolio works in the same way

Your portfolio works like that highway journey. Most investors focus solely on the CAGR (the speedometer), but they ignore the Volatility (the risk of a fatal crash).

Here is how different portfolio mixes performed over the last 9 years. Notice how volatility drops when you add uncorrelated assets into the mix:

Scenario	Equity %	Debt %	Gold %	CAGR	Volatility (Risk)	Volatility (Risk) change %
A	50	25	25	13.2%	8.8%	0%
B	60	20	20	13.5%	10.1%	15%
C	70	15	15	13.8%	11.6%	31%
D	80	10	10	14.1%	13.1%	49%
E	90	5	5	14.3%	14.7%	67%
F	100	0	0	14.4%	16.3%	85%
Source: NSE, AMFI, Bloomberg \| Data is from: 07 Nov 2016 to 31 Dec 2025 Equity: Nifty 50 TRI, Debt: 10Y G-Sec, Gold: Nippon India ETF GoldBees

Think about this:

Would you accept 41% higher risk (volatility) for just a 0.6% extra CAGR? (Comparing C to F)
Would you accept 85% higher risk for a 1.2% extra CAGR? (Comparing A to F)

This isn’t merely due to the recent outperformance of gold.

Look at the difference between Scenario D and Scenario F, where the allocation to gold is only 10%. To generate just 0.3% of extra CAGR, the risk (volatility) increases by 24%.

Your specific allocation will vary based on your risk appetite, goals, and age.

However, this analysis highlights the hidden dangers of chasing that last bit of return. Before you floor the accelerator, ask yourself if the marginal gain is worth the risk of a fatality.

Or in terms of investing, Is the extra return high enough to lose your mental peace?

Author: Nihit Kshatriya, Head of Investor Relations, Capitalmind Mutual Fund.

Lacunae in the SME IPO Markets

Posted on January 12, 2026January 12, 2026 by Auburn Solutions

Mitu Bhardwaj & Kuldeep Thareja

Small and Medium Enterprises (SMEs) have fuelled a sharp surge in Initial Public Offerings (IPOs) on dedicated platforms such as BSE SME and NSE Emerge. In 2025, as many as 268 SME IPOs collectively raised ₹12,111.55 crore, with a significant proportion of these issues coming toward the end of the year. This marks a substantial expansion from just 43 SME IPOs in 2015. Over the same period, funds mobilised have increased more than forty-fold, from about ₹260 crore in 2015 to over ₹12,111 crore in 2025.

Growth of SME IPOs in India

years	Number of SME IPOs	Amount Raised (₹ crore)
2025*	268	12,111.55
2024	240	8,760.89
2023	182	4,686.11
2022	109	1,874.85
2021	59	746.14
2020	27	159.10
2019	51	623.80
2018	141	2,286.94
2017	133	1,679.50
2016	67	537.27
2015	43	260.21

Source: Chittorgarh (2025 figures provisional)

Despite this impressive growth trajectory, the SME IPO segment has been increasingly marred by weak post-listing performance, rising regulatory scrutiny, and several instances of fraud and misuse of funds. While the segment provides a crucial capital-raising avenue for growing enterprises, inflated valuations, poor governance standards, and opaque disclosures have resulted in significant investor losses. Nearly 65% of SME listings in 2024 and around 57% in 2025 are currently trading below their issue price, signalling a clear shift from listing-day exuberance to more sobering market realities.

Key Issues Facing SME IPOs

Overvaluation and Post-Listing Underperformance

A large number of SME IPOs have entered the market at hype-driven valuations, but haven’t been able to sustain the post-listing gains. In 2025, nearly 37% of SME IPOs closed below their issue price on the very first day of trading, compared with only about 9% in 2024. Further, unlike 2024—when close to 30 SME IPOs delivered extraordinary listing gains in the range of 100%–300%—such outcomes were far less common in 2025.

Several factors have contributed to this trend:

Investor over-optimism and low awareness: Retail participation, often influenced by greymarket premiums and momentum trading, has not always been backed by adequateunderstanding of underlying business models. As regulatory scrutiny tightened, unrealisticpricing assumptions were quickly exposed.
Excessive valuations: Many issuers accessed the SME platform during periods of broader market euphoria, with IPO pricing frequently ignoring fundamentals such as revenue sustainability, profitability, and cash-flow strength.
Market weakness: Secondary market volatility and global economic uncertainties highlightedthe fragility of weaker business models, leading to rapid erosion of listing gains.

Market Manipulation, Misuse of Funds, and Fraud

Governance failures have emerged as a serious concern in several SME listings:

Misuse of IPO proceeds: Funds raised for expansion and growth are often diverted through related- party transactions (RPTs) or shell entities. Nearly one out of two listed SMEs reports RPTs exceeding ₹10 crore, raising concerns of circular transactions and inflated financial statements.
Misleading disclosures: Inadequate or misleading disclosures, including inflated revenues and undisclosed pre-IPO arrangements, have significantly undermined investor confidence.
Suspensions and liquidity stress: Approximately 10–12% of SME-listed companies on BSE and NSE face trading suspensions due to non-compliance, leaving investors trapped in illiquid securities with minimal trading volumes.

Promoter Dominance and Governance Gaps

SME issuers are typically characterised by high promoter shareholding and limited institutional oversight. This concentration of control often enables promoters to exercise disproportionate influence over corporate decisions, sometimes prioritising personal liquidity over long-term business growth. Prior to recent reforms, Offer for Sale (OFS) components were frequently large, allowing promoters to partially exit at the IPO stage without materially strengthening the company’s balance sheet.

Broader Economic and Structural Risks

Low liquidity: Thin trading volumes exacerbate volatility and make orderly exits difficult for investors.
Higher vulnerability to shocks: SMEs are more exposed to supply-chain disruptions, competitive pressures, and economic downturns than larger firms.
Restrictions on debt repayment: SEBI regulations limiting the use of IPO proceeds for debt reduction often compel SMEs to continue servicing high-cost borrowings, constraining financial flexibility.

Tightening of the Regulatory Framework

SEBI approved a series of reforms in December 2024 through amendments to the SEBI ICDR and SEBI LODR Regulations, after considering public feedback on its consultation paper which to a great extent tries to address these concerns. Key measures include:

Profitability requirement: SMEs are required to demonstrate a minimum operating profit of ₹1 crore in at least one of the preceding three financial years.
Cap on Offer for Sale: The OFS component in an SME IPO has been capped at 20% of the total issue size, and no single selling shareholder can offload more than 50% of their pre-issue shareholding on a fully diluted basis.
Stricter promoter lock-ins: A minimum promoter contribution of 20% is locked in for three years, with excess holdings released in a phased manner (50% after one year and the balance after two years).
Enhanced oversight of RPTs: Material related-party transactions—exceeding 10% of turnover or ₹50 crore—now require approvals broadly aligned with main-board norms.
Measures to curb speculation: A 90% listing-day price cap (introduced in July 2024) and a 20% pre-open price floor (effective August 2025) aim to reduce excessive volatility and speculative spikes.

SEBI is also reviewing further changes to the ICDR framework, including a proposal to mandate a separately hosted and concise “Summary of the Offer Document” on the websites of the issuer, stock exchanges, and SEBI. Such a summary would enable investors to quickly grasp key risks, financials, and use of proceeds, which are otherwise embedded in lengthy offer documents.

Way Forward

While recent regulatory interventions are a positive step, their effectiveness will ultimately depend on robust enforcement and stronger gatekeeping by market intermediaries. Merchant Bankers and Book Running Lead Managers (BRLMs) must significantly enhance their due diligence standards, as investors often place considerable reliance on the reputation and credibility of these intermediaries when evaluating SME IPOs. Greater accountability for issuers and intermediaries, improved quality of disclosures, and heightened investor awareness are essential to restore confidence and ensure that the SME IPO market develops into a transparent, credible, and sustainable capital-raising platform for genuine growth-oriented enterprises.

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Authors work for NISM and views are personal.

Author: Mitu Bhardwaj, DGM, CCC, NISM & Kuldeep Thareja, DGM, CCC, NISM

Portfolio Management Services: A Perspective for Investors

Posted on January 9, 2026January 9, 2026 by Auburn Solutions

Those who plan to invest in stocks and bonds through a portfolio management service should be aware of its salient aspects and how a PMS is different from mutual funds and alternative investment funds. Here are the key features of investing through a PMS.

Model portfolio and customization

A provider of portfolio management services (PMS) doesn’t operate as a mutual fund or alternative investment fund would, managing a pool of money for investments in shares and bonds.

Instead, each PMS portfolio should be unique as it is supposedly curated by the provider for the client/investor. However, it is not possible to run exclusive portfolios for each investor. That would involve tracking too many stocks and bonds as well as many different portfolios.

What PMS providers typically do is run a model portfolio and replicate it for all clients. Individual client portfolios may vary from the model, but only marginally. In that sense, it operates like a fund with a manager investing a client’s money in stocks or bonds as per the mandate and runs similar portfolios for all investors.

Taxation

For taxation purposes, a PMS is called ‘pass through’—that means a client invests directly in those stocks/bonds. A PMS provider is not a separate entity for taxation purposes, as in the case of mutual funds. The usual rules of taxation apply for those securities.

As an example, listed equity stocks held for less than a year are taxable at 20% plus surcharge and cess. For a holding period of more than one year, the tax is 12.5%. For listed bonds held for less than one year, capital gains tax is applicable at the investor’s marginal income tax slab rate, and for a holding period of more than a year, it is 12.5%.

Mutual funds don’t pay tax because they are tax-free trusts. Tax is applicable for unitholders (investors). When a MF scheme books profit in a stock or bond, it does not pay tax, and the profit remains in the NAV (net asset value).

When the unitholder redeems an investment, tax is applicable. This differential between taxation of a PMS and an MF becomes more pronounced when an instrument is held for less than one year, as the tax rates for short-term and long-term holding are different.

Liquidity

In a PMS, when an investor requires liquidity, an instrument has to be off-loaded in the secondary market. The applicable tax would depend on the period of holding—long or short term. If there is a lock-in clause of say, one year, you would not get liquidity in that phase. If there is an exit load, that penalty would be applicable.

Flexibility

PMS regulations are more relaxed than those of MFs because it is not a mass-market product. In a MF, the maximum exposure per instrument is 10% of the portfolio. In a PMS, there is no such limit. Hence, it is possible to run concentrated portfolios in PMSs. We have discussed customization earlier, which is possible only in a PMS.

Ticket size

In a PMS, the minimum ticket size is ₹50 lakh, but the provider may ask for more in the form of cash, securities or a combination of both. If the PMS provider runs model portfolios in different asset classes, it is possible to have portfolio diversification within the minimum quantum.

If the provider has expertise in equities and bonds and requires ₹50 lakh, you can mandate ₹30 lakh in equities and ₹20 lakh in bonds. Or the allocations can be among various equity strategies of the same provider.

Costs/fees

Apart from the fixed fees, referred to as management fees, there may be profit-sharing. Beyond a certain defined level of profit in a financial year, called the hurdle rate, the returns may be shared between the investor and the PMS provider.

If the hurdle rate is 12% and profit-sharing is 80:20, then returns beyond 12% in a year would be shared in the ratio of 80% to the investor and 20% to the provider. Brokerage expenses for transactions in stocks/bonds may be charged separately.

Every investment option has its pros and cons. You can weigh the options—discretionary PMS (where the fund manager decides), advisory PMS (you pay the fees, take advice and invest yourself), MFs and AIFs—as per your suitability.

Article originally published in The Mint

Author: Mr. Joydeep Sen, Corporate Trainer, Columnist

India’s Financial Markets Must Evolve with Retail Participation Surge

Posted on January 8, 2026January 9, 2026 by Auburn Solutions

India’s financial markets today reflect the energy of a nation on the move. Each day, over eight crore individual investors log into trading apps, browse through market dashboards, and partake in the story of India’s growth. The number of demat accounts has surpassed 15 crores, nearly doubling in the last four years, a milestone that positions India among the world’s most retail- active markets.

This surge in participation is a remarkable achievement. It demonstrates public confidence in market institutions, seamless digital access, and forward-looking regulation. It also signifies a profound cultural shift, from physical savings to financial ownership. However, with this scale and speed of inclusion, markets are beginning to face new forms of complexity that require continuously evolving strategies safeguards.

Complexity and Opportunity In Derivatives

The derivatives segment clearly demonstrates this transformation. In just five years, equity- index options trading has grown more than eight times, making India one of the largest derivatives markets globally by notional value. Technology has allowed trades to be squared off in milliseconds, and the involvement of younger, tech-savvy investors has made derivatives a mainstream part of the financial landscape.

However, this velocity also introduces new dynamics. On certain trading days, especially near expiry, deep out-of-the-money option contracts have shown nearly vertical price jumps, sometimes increasing by several multiples within minutes. While these instances are rare, they demonstrate how concentrated order flows and algorithmic trading can intensify movements in strikes that are far out of the money with low liquidity. Although these episodes are brief, they underscore the need for closer monitoring in a market where scale amplifies every movement.

Volatility and Global Linkages

Periods of increased volatility often align with foreign portfolio investor (FPI) outflows as global funds rebalance their holdings. In 2024 alone, India experienced net FPI withdrawals exceeding Rs 1.2 lakh crore amid global uncertainty, even as domestic inflows from retail and mutual funds helped maintain stability. Retail investors, now representing nearly 38 per cent of cash-market activity, have become the stabilising counterbalance to global fund flows.

That confidence, however, depends on trust that market prices reflect real demand and supply rather than distortions. Maintaining that trust is not about enforcement; it is about consistency, making sure markets stay fair, efficient, and trusted.

From Regulation to Anticipation

India’s regulatory framework has consistently shown foresight. Features like dynamic price bands, real-time risk management, and cross-market surveillance have helped ensure that, despite global challenges, our markets keep running smoothly. The next step is proactive supervision, identifying emerging structural risks before they affect market participants.

Global experience shows that successful derivatives markets are not those with unrestricted access but those with smart safeguards. The United States responded to its rise in zero-day-to- expiry (0DTE) options by enhancing algorithmic monitoring and margin sensitivity rather than imposing restrictions, thereby allowing innovation to continue with robust risk controls. Following its KOSPI-200 incident, South Korea adjusted its market design by tightening strike ranges, increasing margins for out-of-the-money contracts, and establishing a dedicated derivatives-risk monitoring team, thereby restoring stability without limiting liquidity.

Taken together, these models suggest a practical framework for India, one that integrates data- driven, real-time surveillance with adaptable strike rationalisation, tiered margining, and participant-level suitability standards. This approach would enhance transparency, safeguard investors, and boost market confidence, ensuring India’s derivatives ecosystem remains both innovative and institutionally robust as it develops into a global benchmark.

Empowering Investors for The Long Term

India’s new investors are digital-native and aspiring. A generation ago, only a few million individuals participated in stock- market trading; today, tens of millions do so every day. As participation grows, financial literacy and risk awareness must grow too. Focused investor- education modules on derivatives, position management, and volatility can help retail investors better navigate modern markets responsibly.

The Competitive Edge

India’s journey toward a USD 10 trillion economy depends on how effectively its markets convert household savings into productive investments. Improved supervision, increased transparency, and shared accountability among the players in the market ecosystem will ensure that the growing base of trading activity continues to serve the broader goal of nation-building. Safeguarding investor interests is not just about caution, it is a pledge to progress. As India’s markets expand and become more vibrant, trust and transparency will remain their most valuable assets. Protecting that trust is what will support India’s rise, ensuring growth, innovation, and integrity advance together toward a resilient and inclusive financial future.

Article originally published in Business World.

Author: Mr. Venkatachalam Shunmugam, partner, MCQube