On 18 July, CareEdge Ratings downgraded ₹150 crore worth of TruCap Finance bonds to ‘D’, or default, along with ₹750 crore of long-term bank facilities. The ratings agency cited the company’s failure to pay interest and principal on its non-convertible debentures (NCDs) due on 16 July.
The development has left a trail of retail investors in distress, as these bonds were widely distributed via online bond platform providers (OBPPs) such as Golden Pi, Grip Invest, Alitifi (by Northern Arc), and BondsIndia.
These NCDs were first issued in January 2024 via Northern Arc, with subsequent tranches distributed through other platforms. Originally rated BBB and offering coupon rates of 13-13.5%, the bonds were sold in ticket sizes as low as ₹1 lakh.
TruCap, a listed non-banking financial company focused on gold and loans for micro, small and medium enterprises (MSMEs), saw its stock plunge 61.4% over the past year (as of 18 July).
The company was in the process of being acquired by the Marwadi Chandrana Group, but delays in committed fund transfers played a role in precipitating the default.
A person familiar with the matter estimated that around 1,100 investors were impacted, adding that the total outstanding principal owed to retail investors stands at around ₹55 crore.
A spokesperson for TruCap said the company is committed to repaying all dues in full.
The company has ₹370 crore of net debt outstanding, of which ₹270 crore is not NCDs. As for the default of ₹72 crore of NCDs, the company repaid 15% between 18 and 21 July, the spokesperson said.
TruCap has been at the centre of acquisition talks in recent months. InCred Finance was set to purchase its gold loan portfolio via a slump sale in February, but the transaction did not materialize as the Marwadi Chandrana Group wanted to acquire the entire company along with the gold portfolio.
“As on May 31, 2025, TruCap Finance Ltd’s liquidity profile remained stretched given the debt repayments of ₹103 crore over the next three months against unencumbered cash and cash equivalents of ₹57 crore,” CareEdge Ratings said in a note accompanying its downgrade.
“However, CareEdge Ratings had drawn comfort from the expected collection of ₹92 crore during the same period, fund infusion of ₹10 crore from the existing promoters and of ₹100 crore from the Marwadi Chandarana Group (MCG), of which the first tranche of ₹50 crore was expected by June 15, 2025, and the remaining ₹50 crore scheduled in July 2025,” it added.
The delay in debt servicing was due to non-receipt of committed funds and premature redemption of NCDs, which resulted in a liquidity squeeze for TruCap, CareEdge said, adding that its rating action was based on its policy on default recognition.
Bonds break trust
Some online bond platform providers had already flagged concerns.
“We had disabled trading in TruCap on Bondbazaar due to its small size and lack of operational information,” said Suresh Darak, chief executive of Bondbazaar. Wint Wealth and IndiaBonds also did not list the TruCap bonds.
CareEdge Ratings had issued warnings even before it downgraded TruCap bonds to D.
“The company’s gearing levels also deteriorated due to erosion in net worth as on March 31, 2025. The ratings continue to reflect constraints arising from TruCap Finance Ltd’s (TFL) moderate resource profile and persistent asset quality challenges, particularly within its unsecured business loan segment,” CareEdge said in a note dated 4 June. “Moreover, the company reported covenant breaches with certain lenders during FY25, although waivers were obtained in some instances.”
TruCap Finance swung to a net loss of ₹66.60 crore in FY25 from a net profit of ₹11.71 crore in FY24. This was primarily because the company’s credit cost rose significantly to ₹72.80 crore in FY25 from ₹4.11 crore in the previous year, CareEdge said in its June report.
“As on March 31, 2025, TFL reported GNPA (gross non-performing asset) and NNPA of 3.70% and 2.20% on AUM (assets under management) respectively, compared to levels of 1.32% and 0.83% reported, as on March 31, 2024 primarily attributed to decline in AUM, driven by portfolio run-off and limited disbursement during FY25,” the rating agency said.
“Further the company is also experiencing increased stress among the unsecured business loan segment, in line with the industry,” CareEdge added.
Ajai James, a software consultant based in Cochin, Kerala, invested ₹3 lakh in TruCap bonds through one of the online bond platforms on 15 May 2024 as he sought to diversify from equities. But on 16 July 2025, instead of receiving his principal and interest, he received an email from the bond platform announcing the default.
“The company and its promoters are currently evaluating all viable options to address this situation and have assured stakeholders that they are committed to an early resolution,” the online platform said in its email to TruCap bond investors.
“I heard bonds are safer than stocks. I figured that might not actually be correct,” said James over a phone call to Mint.
Default or delay?
CareEdge had first rated TruCap’s bond and long-term bank facilities BBB (positive) in January 2024 but downgraded it one notch to BBB- in February 2025. Another downgrade in June 2025 brought the rating to BB+, two notches below investment grade, giving investors the right to demand early redemption.
Catalyst Trusteeship Ltd, the bond trustee, said in an email to investors that TruCap had requested debenture holders to waive this right, but failed to obtain the majority approval in time.
The issuer then committed to making full repayment on 16 July 2025. That deadline passed without payment, and the expected funding from the Marwadi Group did not come through. The Marwadi Group’s open offer for TruCap shares remains live.
Following the default, Catalyst indicated that TruCap had begun making partial repayments—5% of outstanding dues were cleared on 18 July and another 10% on 21 July.
“I would not call this a default. I would rather call it a payment delay,” said an executive at one of the online platforms that sold TruCap bonds, speaking on condition of anonymity. “The original due date was on a later date. The recent delay was due to mandatory early closure of the NCDs due to a covenant breach.”
The first signs of trouble had emerged as far back as October, when TruCap started breaching covenants linked to its bond agreements. But despite mounting financial pressures and rating downgrades, TruCap managed to meet its obligations until the missed payment on 16 July this year.
A meeting of debenture holders has been scheduled for 8 August to decide the next course of action.
Catalyst did not respond to queries fromMint. There is no clarity yet on what steps is Catalyst planning.
Regulators have so far remained silent. AMint query to the Securities and Exchange Board of India went unanswered.
Risk meets retail
The incident has reignited debate around the role of online bond platforms and the suitability of direct bond investments for retail investors.
“Retail investors should consider the potential risks associated with bonds and not focus solely on the coupon rates offered by bond issuers,” said Abhishek Kumar, a Sebi-registered investment adviser and founder of Sahaj Money. “Usually, bond issuers who offer higher coupon rates do it to compensate for the higher risk of default associated with those bonds.”
“OBPP acts as a matchmaker between retail investors and bond issuers. However, they are compensated through fees collected from bond issuers to promote the bonds, so the entire risk is borne by the investors and not by OBPP. Retail investors should consider all this before investing directly in these bonds,” Kumar added.
Nikhil Aggarwal, founder of Grip Invest, pointed out that all investments carry risk.
“Developments at TruCap seem to be the result of a delay in receiving equity financing combined with an earlier-than-expected redemption of the bonds. Since the underlying loan portfolio of nearly ₹1,000 crore continues to repay interest and principal, the next 8-10 weeks will showcase the final impact to investors,” Aggarwal said.
Vishal Dhawan, another Sebi-registered investment adviser and founder of Plan Ahead Wealth Advisors, said most investors may be better off investing in debt mutual funds unless they have the ability to dedicate time to their bond portfolio.
“Retail investors can consider investing in bonds provided they have the ability to keep track of the changes in financials of the companies issuing the bonds, and the constant shifts in ratings that may accompany them as well. Chasing the highest yields may not be a good strategy as the sustainability of returns along with principal payback are critical determinants.” said Dhawan.
