Finance Forward

What’s Behind the Fall in Popularity? Zero-coupon bonds are losing investor interest as market dynamics shift and liquidity priorities change, altering traditional investment behaviors. In the world of finance, there’s often a delicate dance between risk, return, and timing. One such example is the recent cooling interest in zero-coupon bonds (ZCBs)—once a darling of long-term investors, now increasingly sidelined. But why are these “deep discount” instruments falling out of favor? Let’s break it down in simple terms. What Are Zero-Coupon Bonds? Imagine you lend someone ₹1,000 but they promise to pay you ₹1,500 five years from now—no monthly interest, no coupons, just a lump sum at the end. That’s essentially how zero-coupon bonds work. They are sold at a discount and redeemed at face value. Investors liked them for their predictability and long-term gains. But today, that appeal is fading. Why Investors Are Shifting Away Several key trends are pushing investors toward more li...

How SEBI’s New Rules Are Fueling a Capital-Raising Boom Rights issues are back in the spotlight as SEBI’s new rules simplify the process. Find out how this change is helping firms raise capital faster. Imagine you’re a business owner, and you need cash to expand—but you don’t want to lose control of your company or pay high interest. What if you could raise funds from the very people who already believe in your business? That’s what a rights issue does—and thanks to a recent rule change, this once-sidelined method is suddenly hot again. What Exactly Is a Rights Issue? A rights issue allows listed companies to raise money by offering new shares to existing shareholders, usually at a discount. It’s like offering your loyal investors the first chance to buy more ownership before opening it up to outsiders. Let’s say you own 10% of a company. If they issue more shares and you don’t buy in, your stake gets diluted. But with rights issues, you can buy more and maintain your share—often at a...

States demand a bigger share of central taxes to boost local development. Here’s why it’s becoming a loud economic and political debate. Rising Voices, Growing Needs Imagine running a household where 59% of your salary is controlled by someone else. You ask for money, but they decide how much you get. That’s exactly how Indian states feel when it comes to tax revenue distribution. Currently, the Indian government shares 41% of divisible tax revenue with states. But now, there’s growing demand—led by the BJP-ruled Uttar Pradesh and supported by several others—to increase it to 50%. Why this sudden clamor? Let’s break it down. The Economics Behind the Demand Under India’s federal structure, the Centre collects most of the taxes—like income tax and GST—and then distributes a portion to the states. The idea is rooted in the principle of fiscal federalism, where resources are shared to meet the specific needs of regions. However, states argue that their expenditure responsibilities—h...