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: portfolio management services platform, which is however highly lacking in transparency. This is so much so that each party involved in the product may not know the other. The second is the mutual fund platform, which buys structured products and we in turn can invest in those funds. And the third platform is through direct debentures of the company that they may offer to their own customers. These are debt-based structured products and are the most transparent.
What is the market size of structured products? How do companies start these products?
The market size of structured products is very hard to gauge in India and it also keeps varying, which does not make it any easier. However, from being to Rs 400-500 crore a month it has now slipped to Rs 200 crore a month. The slowdown is largely due to lack of investing traffic in general and also as many of international banks are no longer trusted.
Companies start a structured product mainly to raise money. Say your company needs Rs 100 crore and you have Rs 100 crore worth of property with the help of which you plan to raise the money. You can take a mortgage to raise Rs 50 crore and give out debentures on which you can give a return of 18-19%. Then your company has to create a security for Rs 50 crore and list it in the Nifty. This is advisable to do for tax purposes. Post all this, the NBFC or bank prepares the product and then tries to sell it. ...
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