Money With Monika | RBI must signal danger: Lessons from Yes Bank AT1 Bonds
The writing down of Yes Bank’s AT1 bonds worth over Rs 8,400 crore in the aftermath of the scandal earlier this year had caused some alarm. But what seems to have heightened investor anxiety is the Reserve Bank of India’s stance to complaints filed against the write-off.
The central bank is treating the episode as investment gone bad, signalling to investors that they must pay closer attention to the product documents, and be ready to face the risk if they are opting for higher returns. While this may be justified in the case of high net worth individuals and corporates, is it fair to the retail investor?
I suggest some measures which the central bank can adopt to make investment contracts easier to understand for the retail investor, so that they don’t lose their hard-earned money due to advisors chasing targets.
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