Not whole, just yours | How fractional shares reflect a new ownership culture

As India experiments with fractional shares, the real question is about how this could redefine what it means to own, invest, and stay committed.

Imagine opening your trading app on your payday, seeing the stocks you have read about — say, MRF (~Rs 1,47,000) or Page Industries (~ Rs 48,000) — and realising even a single share costs more than your monthly salary. For many young investors, this is where the dream ends.

But, fractional shares promise to break that wall. Instead of waiting years to save enough, you could start by investing a small sum/fraction (say Rs 500) in a company whose full share trades at a very high price.

The Securities and Exchange Board of India (SEBI)’s recent decision to let a Bengaluru-based fintech startup pilot fractional share investing inside its innovation sandbox might look, at first, like just another new product. After all, fractional shares already exist in a technical sense. When companies issue bonus shares or split stock, fractions often appear on paper, settled in cash. But what SEBI is allowing now is different. It’s a design to let retail investors buy and hold less than one whole share as a planned feature.

This model has become familiar in the US, where platforms like Robinhood and Fidelity have drawn millions of first-time investors by making investing feel as natural as scrolling through a feed. Before asking the usual question — ‘Is India’s equity market ready for fractional shares?’ — it may help to ask something simpler and deeper: Why do we even need them?

India now has several high-value stocks whose prices put them out of reach for most retail investors who prefer to spread their bets. Fractional shares remove that barrier. But the cultural story is more interesting. Young Indians today are used to sharing ownership in many forms: subscriptions, buy-now-pay-later plans, or pooling money for holidays. Ownership no longer means buying the whole thing. It means having a slice, a stake, a say.

This is why the idea feels timely. India’s National Stock Exchange (NSE) now has over 11 crore unique investors, with around 1 crore added in just five months this year. Millennials already dominate this growth. If fractional shares attract even more first-timers, trading volumes could rise. On the face of it, that looks healthy: more participation, more liquidity, and a market that feels open.

For a young saver shut out of real estate, and offered few tax breaks to save under the new income tax regime, fractional investing could be productive. It turns small monthly surpluses into exposure to equity, which over time could beat inflation and build financial discipline. Yet this depends on more than product design. It rests on whether incomes keep growing, whether enough people have jobs and a salary surplus to save, and whether confidence in the market remains steady. Access alone won’t build wealth if the economic winds don’t co-operate.

Some may ask, don’t we already have enough brokers — nearly 4,000, with many calling themselves ‘neo-brokers’? Why do we need more? The answer is subtle. Fractional ownership isn’t simply a new button on the same brokerage screen. It demands a different structure: holding entire shares in custody and splitting digital entitlements among thousands, while ensuring each investor remains the legal beneficiary. This creates operational challenges, from recording dividends to handling corporate actions, and requires technology that keeps costs low even when ticket sizes are tiny.

SEBI’s sandbox is a smart move. By allowing controlled experiments, regulators can see whether such a system can work at scale without breaching trust or adding hidden risks. The Companies Act today doesn’t recognise sub-shareholding below one unit. Brokers aren’t allowed to hold shares as principals. Tax treatment and audit trails also become more complex when ownership is divided into digital slivers. Testing these challenges in a sandbox helps regulators watch what breaks, what bends, and what holds.

Yet the bigger story isn’t just about access or compliance. It is about how fractionalisation could quietly change what it means to invest. Today’s investor might be drawn in by low costs, slick design, and instant liquidity. The experience can feel like browsing social media, with small trades, real-time dashboards, and nudges to buy or sell. This can make investing feel closer and more personal — but it can also make it more impulsive.

We’ve already seen, in the US and elsewhere, how platforms offering fractional trades can encourage frequent trading and even speculative surges. More volume is good, but if it comes from people reacting to screens rather than company fundamentals, markets could become more volatile. If economic conditions worsen, the same ease of exit could amplify panic selling.

None of this is an argument to ban or resist fractional shares. On the contrary, if designed carefully, they could bring millions into markets who currently watch from the sidelines. With clear rules, strong custody safeguards, and honest investor education, fractional shares could help young Indians start early, stay invested, and build confidence.

But fractionalisation isn’t just a small product tweak. It’s part of a broader shift in how markets and society view ownership itself. From whole units to partial claims. From patient capital to just-in-time investing. From shareholders who see themselves as owners to investors who might hold dozens of tiny positions, bought and sold in seconds.

In the end, SEBI’s sandbox is only the start. The real test isn’t technical alone. It’s about whether our laws, tax systems, and culture can keep up with the idea that ownership is now digital, shared, and fluid. Whether tomorrow’s investor, aged 20 or 70, can participate confidently without being overwhelmed by noise and novelty.

Fractional shares may indeed make the market more open. But they will also challenge us to think harder about what it means to truly own a part of something — and to stay responsible for it, even when our stake is just a fraction.

(Srinath Sridharan is a corporate adviser and independent director on corporate boards. X: @ssmumbai)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.