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Bonds: Generate up to 12% returns

Explore the wide range of bonds available in India!

Bonds India


What are Bonds?

Bonds are fixed-income instruments that give steady income to investors. Bonds can offer a more stable and predictable source of income compared to other types of investments, such as stocks, mutual funds.
State & Central Governments, Corporations like NTPC, India bulls issue bonds to raise capital for their business expansion.
The Bond issuer repays the loan, plus interest on a specified date as agreed in the Bond Purchase Agreement. Bonds are transacted in the financial markets. Their value can fluctuate based on several factors, such as changes in interest rates, bond issuer's creditworthiness and other risk factors as stated in the issuer's Information Memorandum. Investors should read all the relevant documents carefully before making investments.


What is the bond market?

The size of India’s bond market is more than $1.8 trillion or ₹100 lakh crore. But what is the bond market exactly? The bond market is where borrowers like the governments, public companies and private companies borrow money from investors like individuals, mutual funds and corporates by issuing bonds. The lenders of money are called bondholders, whereas the borrowers of money are bond issuers.

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India’s Bond Market Success

Stock of corporate bonds has outstandingly grown by 4.5 times in the last 11 years

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Higher returns than FDs, savings account

Interest rates in March, 2023


Savings Account


Fixed Deposits


Government Bonds


Corporate Bonds


Why should you invest in bonds?

Investing in bonds can help you in multiple ways. A few use cases of bonds are discussed below:

low risk investing

Low-risk investing

Bonds offer a low-risk investment option. They can act as stepping stones towards the capital market for traditional fixed deposit investors with the opportunity to earn higher returns at only a slightly higher risk.
low risk investing


Bonds can help you diversify your investment portfolio if it is equity heavy. Adding bonds and creating a diversified portfolio will help you create a stable portfolio without compromising on returns.
low risk investing

Build a prosperous India

By investing in bonds, you are not only investing your savings but also helping the bond issuers conduct their operations and create a prosperous future for India.

How to identify the right bonds?

bonds credit rating

Credit Rating

Not all bonds are equal. Even the Bonds with higher Credit rating can perform bad.

bonds maturity date

Maturity Date

Staying invested until the maturity date may reduce bond risks associated with reinvestment of coupons and liquidity.

bonds yield to maturity

Yield to Maturity

Yield to maturity indicates the expected annual return of a bond if you stay invested until the bond’s maturity.


What are the risks of investing in bonds?

Bonds are generally associated with safety and capital protection. However, bonds are not 100% risk-free and may have several risks. Let’s look at the 4 most significant risks in bond investing:


Credit Default Risk


Interest Rate Risk


Reinvestment Risk


Liquidity Risk



Important bond concepts

Face Value

Face Value

Face value is the amount the bond promises to pay on maturity. Also known as par value, it is decided by the bond issuer before the bond issuance.
coupon rate

Coupon Rate

The coupon rate determines the coupon or interest payment (in rupee terms) the bondholders are eligible to receive as long as they own the bond.
bonds tenure

Bond Tenure

Bond tenure is the period for which the bond will be active. Unlike maturity, which indicates the bond’s life at the time of issuance, tenure indicates the bond’s remaining life.
credit quality

Credit Quality

A bond’s credit quality reflects the bond issuer’s trustworthiness. The credit rating assigned by independent credit rating agencies represents each bond’s credit quality.
bonds maturity


Maturity is the period of the bond’s total life. Unlike bond’s tenure, which indicates the bond’s remaining life and changes, maturity is fixed and indicates the entire life of the bond.
Yield to maturity

Yield to Maturity

Yield to maturity or YTM indicates the total annual return expected if you invest in the bond on a given day and hold it until maturity. YTM assumes that the coupons or interest payments are reinvested at the YTM.
Tradable Bonds

Tradable Bonds

Tradable bonds are bonds that can be traded by market participants either on an exchange (like BSE) or over-the-counter (OTC).
Accured Interest

Accrued Interest

Accrued interest is the interest that a bond has accrued since the last interest payment but has yet to be paid out to the investor.
Call Option

Call Option

If a bond has an embedded call option, it means that the bond issuer has the right (but not the obligation) to call the bond back at specific points in time or when specific conditions are met.
Put Option

Put Option

If a bond has an embedded put option, it means that the bondholder has the right (but not the obligation) to return the bond to the issuer at specific points in time or when specific conditions are met.

Still got questions? We’re here to help.

Bonds are fixed-income security that allows investors to lend money to an issuer, such as a government or corporation, in exchange for interest payments over a specified period.

Bonds in India are loans where the investor acts as the lender, and the issuer acts as the borrower. In return for the loan, the issuer promises to repay the investor the face value of the bond, along with any interest earned, at a predetermined date in the future. Bonds can be a crucial tool for issuers to raise funds and fulfill their capital requirements while providing investors with a reliable source of income.

However, investing in bonds carries risks, such as credit risk, interest rate risk, and inflation risk. Understanding the various types of bonds, their risks and benefits, and how they fit into an investment portfolio is key to making informed investment decisions.

The minimum investment for most bonds is Rs. 10,000. However, for some bonds like SDLs the minimum investment required could be as high as Rs. 10,00,000.
If the bond owner nominates someone, the nominee becomes the bond owner. The nominee could be a legal heir, like a spouse, child, parent or any relative nominated by the bond owner. In cases where the nominee is not the legal heir, he/she is obliged to transfer the Bond to the legal heir as per the probated will of the Bond owner. If there’s no nominee for the investment, a legal heir can transfer the bond ownership to himself/herself by presenting required documents like the probated will or the Legal Heir Certificate or Succession Certificate and Death Certificate. It is strongly recommended to nominate someone, especially for long-term bonds, to save your family troubles during the ownership transfer.
Yes, you can lose money by investing in bonds in two situations. First, if the bond issuer defaults on interest or principal payments. Second, you redeem the bond before maturity when market interest rates have increased. Bond price and market interest rate are inversely related so the price of existing bonds fall when market interest rates go up.

The Government of India (GOI) issued bonds that are considered to be safe to buy. State bonds or SDLs (State Development Loans) are considered almost as safe as central GoI bonds. While government bonds are safe from the ‘credit default’ perspective, they are subject to risks associated with interest rates like other (corporate) bonds.

Most bonds are listed and can be sold on the exchange (NSE or BSE) anytime if buyers are available, but the redemption process is not straightforward and may require a broker's service.

There is no penalty for selling bonds before maturity in most cases. However, there may be implications like losing money or paying higher taxes when you sell bonds before maturity.

When it comes to selecting the best bonds for your portfolio, it's vital to consider your financial objectives, tolerance for risk, and investment plan. For Indian portfolio holders, evaluating the credit rating of the issuer, the Maturity Date, and the Yield to Maturity is crucial in determining the best bonds to invest in. Seeking guidance from a financial advisor or conducting thorough research can aid in making informed investment choices that align with your goals and risk tolerance.

Bonds and fixed deposits are popular investment options in India. Bonds are like loans you give to companies or governments, while fixed deposits are like deposits you keep with a bank. Both instruments provide stability in income and capital protection and are safer and more accessible than stocks.

Learn about the differences between Bonds and Fixed Deposits by reading our in-depth blog.