A loan you give the issuer, for predictable income.
Bonds are debt instruments issued by companies or governments to raise money. When you buy a bond, you lend money to the issuer and receive regular interest (coupon) payments plus the return of your principal at maturity.
Indicative yields
Where the curve sits today
Approximate annualised yields across tenures and issuer categories. For indicative purposes only — call us for live, executable quotes.
The number that matters
A 7% FD and a 5.6% tax-free bond can be the same trade.
Fixed income is quoted before tax and earned after it. Once your slab is applied, the ranking of the options often flips. Put your own numbers in and see where you actually land.
After-tax comparison
FD vs bond vs tax-free bond, on the money you actually keep.
Your tax slab
At a 30% rate, a 5.60% tax-free bond leaves you exactly as well off as
a 8.14% fixed deposit
That is the number to compare against — not the coupon on the front of the brochure.
Adjust the rates
Bank fixed deposit
7.10% gross→4.88% net
Interest added to income and taxed at your slab, every year.
after 5y ₹12,69,296
Corporate / PSU bondBest after tax
9.00% gross→6.19% net
Coupon is taxed at slab too — but the headline rate is higher.
after 5y ₹13,50,389
Tax-free bond
5.60% gross→5.60% net
Interest exempt under Section 10(15). Lower coupon, nothing deducted.
after 5y ₹13,13,166
Indicative and simplified: coupons are assumed reinvested at the same post-tax rate, TDS timing and any capital-gains treatment on secondary purchases are ignored, and tax-free issues are no longer being made — they trade in the secondary market at a yield that moves. Not tax advice. Confirm your slab with your CA before acting on this.
How bonds work
Steady, predictable income — by design.
While ETFs are traded on stock exchanges, bonds are focused on providing steady, predictable income over a set duration.
The Loan
You lend money to the issuer, who pays interest at regular intervals — monthly, quarterly or annually.
The Repayment
At the point of maturity, the issuer repays the full principal amount back to the investor.
The Assurance
Interest rates and principal are usually fixed, giving investors highly predictable returns.
Anatomy of a bond
Know the moving parts.
Fixed Interest Payments
Bonds pay coupon at predetermined intervals — a predictable, stable income stream, ideal for conservative strategies.
Maturity Date
Short-term: months to 5 years. Medium-term: 5 – 10 years. Long-term: 10+ years.
Credit Rating
Agencies like CRISIL, CARE and ICRA assess the issuer's creditworthiness so you can quantify default risk.
Face Value
Also known as par value — the principal amount the issuer agrees to repay the bondholder at maturity.
Issue Date & Coupon Rate
Issue date marks the bond's commencement. Coupon rate is the annual interest paid on face value.
Yield to Maturity (YTM)
Total return if you hold the bond to maturity — accounts for coupons plus any gain or loss vs. purchase price.
Types of bonds
Nine structures, one toolkit.
Zero-Coupon Bonds
No interest; full face value paid at maturity. Typically issued at a deep discount.
Fixed Rate Bonds
Interest rate stays the same until maturity, providing predictable income for investors.
Floating Rate Bonds
Interest adjusts periodically based on benchmarks like the RBI repo rate.
Inflation-Linked Bonds
Payments adjust for inflation, protecting the real value of returns.
Municipal Bonds
Issued by local governments for public projects like roads, schools and water systems.
Callable Bonds
The issuer can buy back or redeem the bond before maturity under certain conditions.
Puttable Bonds
Investor can sell the bond back to the issuer before maturity at a pre-specified price.
Government Bonds
Issued by central or state governments; considered very safe (sovereign guarantee).
Corporate Bonds
Issued by companies; higher yields with slightly higher risk than government bonds.
Who issues bonds in India
From sovereign to corporate.
Government of India
Short-term (91–364 days) and long-term (up to 40 years) Treasury bills and Dated Securities.
Public Sector Undertakings (PSUs)
Major government-backed companies like NTPC, NHAI and PFC offering reliable corporate debt.
State Governments
State Development Loans (SDLs) — fund regional development and state-level projects.
Municipal Corporations
Bonds issued by local urban bodies to finance infrastructure like roads and water systems.
Banks & NBFCs
Institutions like HDFC, SBI and Bajaj Housing Finance issuing bonds for credit operations.
Private Corporations
Higher yields than government or PSU paper, because you are taking more credit risk. Liquidity depends on whether the issue is listed on the NSE or BSE.
Advantages
Why bonds belong in your portfolio.
Predictable, stable income
A known coupon on known dates, whatever equities are doing that quarter.
A legal claim, not a hope
Bondholders are legally entitled to their interest and their principal back — you are a creditor, not an owner.
Tax-free options exist
Interest on certain older PSU issues is exempt under Section 10(15). None have been issued since 2016, so they only trade secondary — which is why the yield moves.
Genuine diversification
Bonds often move differently from equities, which is what makes them useful alongside them rather than instead of them.
Limitations
Eyes-open investing.
Inflation Risk
Fixed interest rates may lose purchasing power if inflation rises significantly.
Limited Liquidity
Certain long-term or unlisted bonds can be difficult to sell quickly in secondary markets.
Lower Returns
While safer than stocks, historical returns on bonds are generally lower over time.
Bond ratings (India)
Understanding credit risk.
Issued by CRISIL, CARE, ICRA and others.
| Rating | Safety | Credit Risk |
|---|---|---|
| AAA | Highest | Very low risk |
| AA | High | Low risk |
| A | Adequate | Low risk |
| BBB | Moderate | Medium risk |
| BB | Moderate | Speculative, higher risk |
| B | High | High risk |
| C | Very High | Very high risk |
| D | In Default | Defaulted or expected to default |
FAQ
Bonds, answered.
Are bond returns guaranteed?+
No, bond returns are not always guaranteed. While bonds typically offer fixed interest (coupon) payments and face value at maturity, the guarantee depends on the type of bond and the issuer. Always check the bond's credit rating before investing.
What is the riskiest type of bond?+
The riskiest bonds are 'junk' or high-yield bonds, typically rated BB or lower by credit rating agencies.
What is the safest type of bond?+
Bonds issued by the Government of India are generally considered the safest. Though their returns are lower, the risk of default is virtually zero.
How do bonds work?+
Bonds are issued by governments and enterprises to raise funds. By purchasing a bond, you are making a loan to the issuer, who agrees to repay periodic interest payments and the face value of the loan on maturity.
How to buy bonds?+
Bonds, unlike stocks, are not openly traded on an exchange. Instead, they are traded over the counter, meaning you can purchase them through brokers.
Live quotes
Ask for the yield sheet.
The curve above is indicative. The yield sheet is the live one — what is actually on the shelf this week, with issuer, coupon, maturity, rating and the minimum lot.
Tell us roughly what you are looking to deploy and over what horizon, and we will send the issues that fit rather than the whole list.
Or talk to an expert now