Market rises
- Principal-protected
- A gain linked to the rise, often up to a cap
- Principal at risk
- A gain linked to the rise, often up to a cap
- If the issuer defaults
- You can lose money
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Structured Products
A market-linked formula, set out in advance.
Most structured products in India are market-linked debentures (MLDs): a bond combined with a derivative, so what you receive at maturity follows a formula linked to an index or other reference. The formula is fixed upfront; the outcome is not.
At a glance
- Common structure
- Market-linked debentures (MLDs)
- Issued by
- NBFCs, banks and financial institutions
- Tenure
- Varies by issue; often 2–5 years
- Payoff
- Set by a formula in the term sheet
- Key risk
- Issuer credit risk, even if “protected”
- Our role
- We distribute; payment depends on the issuer
Terms vary by issue. Read the term sheet and offer document before investing.
What it is
The structured products we distribute are mainly market-linked debentures (MLDs): debt instruments whose payoff is linked to an index, share or other reference. The term sheet sets out the formula and illustrates outcomes under different market scenarios.
Some issues are designed to repay principal at maturity, subject to their terms and the issuer’s ability to pay. Others can return less than you invested. Gains are often capped.
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You invest
In an issue, such as an MLD linked to an index like the Nifty 50.
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The reference is observed
On dates set out in the term sheet.
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The payoff is calculated
Market moves, caps and barriers all affect the amount.
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Payment depends on the issuer
If it cannot pay, you can lose money, even on a “protected” issue.
How outcomes can differ: one illustrative structure
Swipe to compare →
Market risesMarket flatMarket falls
Principal-protectedA gain linked to the rise, often up to a capPrincipal back, with little or no gainPrincipal back, if the issuer pays
Principal at riskA gain linked to the rise, often up to a capLittle or no gainYou can lose part of your principal, often below a barrier
If the issuer defaultsYou can lose moneyYou can lose moneyYou can lose money
Market flat
- Principal-protected
- Principal back, with little or no gain
- Principal at risk
- Little or no gain
- If the issuer defaults
- You can lose money
Market falls
- Principal-protected
- Principal back, if the issuer pays
- Principal at risk
- You can lose part of your principal, often below a barrier
- If the issuer defaults
- You can lose money
Illustrative only. Actual outcomes depend on each term sheet, including participation, caps, barriers and dates, and on the issuer paying.
How structured products differ
Two questions matter most: what happens to your principal, and what drives the payoff. These features combine; a rate-linked issue, for example, can still put principal at risk. Each term sheet sets out the exact terms.
Principal-protected
Designed to repay principal at maturity, if the issuer pays and you hold to maturity. Not a guarantee; selling early can mean a loss.
- Rating agencies add a “PP-MLD” prefix
- It describes the structure, not safety
Principal at risk
Depending on the formula and the market, you may get back less than you invested. The term sheet explains how losses are worked out.
- Losses often start below a set level (a “barrier”)
- The term sheet shows how much is at risk
What drives the payoff
The reference and the formula, both set out in the term sheet.
- Equity shares, an index or interest rates
- Participation rate, caps and barriers
- Observation dates and early-redemption terms
Is it for you?
May be worth exploring if you…
- Can keep this money invested until maturity
- Have adequate liquidity outside this investment
- Understand that repayment depends on the issuer, even if principal is protected
- Prefer a defined payoff structure and understand its limits
Pause and consider if you…
- Need guaranteed returns or guaranteed capital
- May need the money before maturity, when selling can be hard or at a loss
- Need predictable, regular income
- Already have large exposure to the same issuer or group
This is general information, not an assessment of your suitability, which depends on your circumstances and the specific scheme or product.
Safeguards
- Listed MLDs regulated by SEBI under the rules for non-convertible securities
- Credit-rated; a rating is an opinion, not a repayment guarantee
- Independent valuations published periodically; not an assured exit price
- Listed on a stock exchange, with ongoing disclosures
- Payoff scenarios, principal conditions, costs and risks set out in the term sheet
Regulation, listing and credit ratings do not guarantee repayment or returns.
Risks & costs to know
- Credit risk: if the issuer defaults, you can lose returns and principal, even on a “protected” issue
- Market risk: returns can be low or nil, depending on the reference and the formula
- Liquidity: an early exit may be unavailable, or at a large discount
- Complexity: observation dates, caps, barriers and early-redemption terms can change outcomes
- Costs: structuring and distribution costs are built into the price; exit spreads may apply
Have a concern?Our service: escalation matrix · An issue: the issuer first · Still unresolved: SEBI SCORES or SMART ODR
How we help
- 1Step 1
Listen
We understand your goals, time horizon, existing holdings and comfort with risk.
- 2Step 2
Explain options
We set out relevant options from regulated providers, with costs, liquidity and risks side by side.
- 3Step 3
You decide, we coordinate
Once you decide, we help with KYC, paperwork and onboarding with the provider.
- 4Step 4
Review
Supported holdings appear in our app, and we review them with you as markets and life change.
You decide whether to invest, in what, and on what terms. How we are paid for each product is disclosed before you invest. See how we’re paid →
Common questions
Short answers to what families ask us most. For anything specific to your situation, talk to us.
Still have a question?Mon–Fri, 8:00 AM – 6:00 PM · Sat, 9:00 AM – 3:00 PM IST
Can I lose money?
Yes. In principal-at-risk products you can lose part of your principal if markets move against the formula. In any product, you can lose money if the issuer defaults or if you sell early at a lower price.
What does “principal-protected” mean?
The product is designed to repay your principal at maturity, but only if the issuer is able to pay and you hold to maturity. It is not a guarantee.
What is a payoff table?
A table in the term sheet showing what you would receive at maturity if the reference ends at different levels, as in the illustration above. It shows how the formula works; it does not predict the outcome.
Does a high credit rating protect my principal?
No. A rating is an agency’s opinion of the issuer’s ability to pay. It can be downgraded during the product’s life, and it is not a guarantee.
Are quoted returns annual or for the whole tenure?
Check the term sheet. Payoffs are often stated for the full tenure, not per year, so a figure can look higher than its annual equivalent.
Can I exit early, if it is listed?
Listing does not mean easy selling. Buyers may be few, and the price may be well below the amount invested or the indicative valuation.
Can the product end before maturity?
Some issues have early-redemption features, such as a call by the issuer or an automatic payout if the reference reaches a set level. The term sheet explains them.
How are MLDs taxed?
Under current law, gains on the transfer, redemption or maturity of market-linked debentures are generally treated as short-term capital gains and taxed at applicable rates, whatever the holding period. Treatment depends on your circumstances; please consult your tax adviser.
Talk it through before you decide.
We’ll explain the options and trade-offs. You decide.
Structured products carry market, credit and liquidity risks. Read the term sheet and offer documents carefully before investing.