How to invest in bonds in India

What a bond actually is

A bond is a loan you make to a borrower — a government, a state, a PSU or a company — in return for fixed interest (the "coupon") and your money back on a set date (the "maturity"). You buy at a face value (as low as ₹1,000 for RBI savings bonds, and ₹10,000 for privately placed corporate bonds issued under SEBI's 2024 rule — a permitted minimum denomination where the issuer appoints a merchant banker, not a re-pricing of every bond), collect coupon payments along the way (usually annually or half-yearly), and get the face value returned at maturity. The one number that matters most is the yield to maturity (YTM) — the true annualised return if you hold to the end — not the headline coupon, because a bond's market price moves and you may buy above or below face value. That is the whole product: predictable income and return of capital, as long as the borrower does not default and you hold to maturity.

Why the interest now: the RBI cut the repo rate through 2025, fixed-deposit rates have started falling, and the same year SEBI lowered the permitted face value on privately placed corporate bonds, so money is rotating out of FDs into bonds to lock in higher yields before they fall further. That macro backdrop is real, but it does not change the homework — every bond still carries the borrower's credit risk and its own tax treatment, and both decide whether the deal is actually good.

The four types you'll actually meet

Almost every bond a retail investor in India buys falls into one of four buckets. They differ less in mechanics than in who is borrowing, how they are taxed, and what job they do in a portfolio. Pick the type first — it decides where you buy and how you are taxed.

Where to buy bonds in India — the channels

There is no single "bond exchange app." What you use depends on which bond you want. Five practical channels, from most to least familiar:

• Your existing demat + broker account. If you already trade shares, you can buy listed bonds and NCDs on NSE/BSE straight from Zerodha, Groww, ICICI Direct, Angel One and others, at live exchange prices. G-secs and T-bills are available through most brokers too (Zerodha routes RBI auctions on Kite). No new account needed.
• An OBPP (Online Bond Platform Provider). SEBI-registered specialist platforms — Wint Wealth, IndiaBonds, GoldenPi, Bondbazaar, Grip and roughly 25 others — curate corporate bonds and NCDs in a slick app. They advertise "zero brokerage" but most earn a hidden price markup instead (next section). You still need a demat account, which they help you open.
• RBI Retail Direct — the government's own zero-fee channel. It opens a Retail Direct Gilt (RDG) account directly with the RBI to buy G-secs, T-bills, SDLs and Sovereign Gold Bonds at auction / exchange prices with zero fees, zero commission and zero markup on RBI's side. RBI itself charges nothing, but funding a purchase can still carry a third-party payment-gateway charge — UPI is free, while net banking may add a small fee — so "zero transaction fees" is true only for RBI's own charges. No demat, no broker. The catch: secondary-market liquidity is thin, so plan to hold to maturity. (The old NSE goBID app was shut in July 2025; RBI Retail Direct is now the direct route.)
• Your bank, for the RBI Floating Rate Savings Bond. The 8.05% FRSB (fixed for Jul–Dec 2026) is NOT sold on RBI Retail Direct — you buy it through SBI, HDFC Bank, ICICI Bank, Axis Bank and other agency banks (net banking or branch), or directly. No demat needed; it is held in a Bond Ledger Account.
• The issuer directly, for 54EC bonds. REC, PFC, IRFC and HUDCO capital-gain bonds are bought from the issuer's own website (or through a broker), bypassing the platforms entirely. The 5.25% coupon is set by each issuer and can change on new tranches, so check the live rate on the issuer's site before you apply. Held in demat or physical form.

Why "zero brokerage" on bond platforms isn't zero cost

Bond platforms love the phrase "zero brokerage," and it is technically true — most OBPPs charge no visible fee. They make money on the price spread instead: they source a bond wholesale and sell it to you at a slightly higher price, which is a slightly lower yield to you. You never see a line item; it is baked into the price. On a corporate bond that spread can quietly cost a fraction of a percent of yield — small per bond, real across a portfolio.

Two honest exceptions are worth knowing. Bondbazaar routes trades at live exchange prices (no markup), and ICICI Direct charges an explicit, disclosed brokerage on G-secs (about 0.06% on primary auctions) rather than a hidden spread. Buying G-secs and T-bills through RBI Retail Direct has zero markup by design — RBI takes no fee, though a net-banking funding payment may still carry a small third-party gateway charge (UPI is free). The rule of thumb: for plain government securities, the direct or on-exchange route is cheapest; for curated corporate bonds, a platform is fine — but compare the yield you are quoted against the bond's fair value.

Before you trust any platform, confirm it is SEBI-registered and read a neutral review. Our bonds section keeps a registry of SEBI-registered platforms at /bonds/sebi-registered-platforms and individual reviews (for example /bonds/wint-wealth-review and /bonds/stable-money-review) that show each platform's SEBI number, real fee model and complaint history — the things the platform's own homepage will not tell you.

How to buy your first bond — step by step

The exact steps depend on the channel, but here is the common path for a listed or corporate bond via a broker or OBPP, with the government-direct route noted alongside.

• 1. Decide the bond type first, not the platform. Safety and simplicity → a G-sec or the RBI FRSB. Higher yield with credit risk → a rated corporate bond or NCD. Tax on a land/building sale → 54EC. This one choice picks your channel.
• 2. Get the account. Listed and corporate bonds need a demat account (open with any broker or OBPP in ~1–3 working days with PAN + Aadhaar + bank proof). G-secs via RBI Retail Direct need a free RDG account, opened online at rbiretaildirect.org.in (RBI charges no account or transaction fee; a net-banking top-up may add a small gateway charge, while UPI is free). The FRSB just needs your bank's net banking.
• 3. Check the numbers that matter: coupon, maturity date, credit rating (AAA is safest; below AA, tread carefully), and above all the yield to maturity — that is your real return. On a platform, compare the quoted YTM against the exchange fair value so the markup is visible.
• 4. Place the order. On a broker or OBPP, search the bond (or its ISIN), enter quantity and confirm; payment comes from your linked bank. On RBI Retail Direct, subscribe in the relevant auction or buy on the secondary window. For the FRSB, fill the bank's online form and pay.
• 5. Confirm settlement and keep the paper. Listed bonds settle to your demat (T+1); G-secs to your RDG account; the FRSB to a Bond Ledger Account. Note every coupon date in your calendar and save the contract note or holding statement for tax time.

The four risks nobody puts on the marketing page

Bonds are safer than stocks on average, not risk-free. Four risks decide whether a bond is actually a good deal:

• Credit / default risk. The borrower can fail to pay. It happens even on regulated platforms — the TruCap NCD default in July 2025 hit buyers across GoldenPi, BondsIndia, Grip and others. A high coupon is compensation for higher risk, not a free lunch; a 13% NCD is not a free 13%. Stick to AAA/AA-rated paper until you can judge an issuer.
• Liquidity risk. Many bonds barely trade. If you need to exit before maturity you may not find a buyer at a fair price — RBI Retail Direct's secondary market is notably thin, and small corporate issues can be near-impossible to sell. Buy only what you can hold to maturity.
• Interest-rate risk. When market rates rise, existing bond prices fall (and vice-versa). Sell a 10-year G-sec before maturity after rates have risen and you can book a capital loss. Hold to maturity and this risk disappears; trade bonds and it is very real.
• Tax-at-slab risk — the quiet return-killer. Bond interest is taxed at your income-tax slab, not a flat rate. An 8.05% FRSB coupon is only about 5.5% after tax in the 30% bracket, and TDS of 10% kicks in once annual interest crosses ₹10,000. Always compare bonds on their post-tax yield — that is exactly where tax-free bonds (interest exempt) and 54EC (tax saved on the qualifying capital gain) earn their place. See /learn/rbi-bonds and /learn/54ec-capital-gain-bonds for the full tax math.

Which bond fits which goal

Match the bond to the job, then open the specific guide:

• Want maximum safety and don't need the money for years → government bonds (G-secs / SDLs) or the 8.05% RBI FRSB. Start with /learn/government-bonds-india and /learn/rbi-bonds.
• Just sold land or a building and facing long-term capital gains → 54EC bonds from REC/PFC/IRFC/HUDCO, invested within 6 months of the sale. The exemption covers LTCG from a sale of land and/or a building only — not shares, mutual funds, gold or other assets — and the ceiling is a hard ₹50 lakh per capital gain: the second proviso to Section 54EC caps the aggregate at ₹50 lakh even if you split the same gain across the financial year of the sale and the next year, so you cannot claim two ₹50 lakh limits (₹1 crore) for one gain. See /learn/54ec-capital-gain-bonds.
• In the top tax slab and want tax-free income → tax-free PSU bonds on the secondary market through your demat account (interest is exempt from tax).
• Chasing higher yield and willing to do the credit homework → rated corporate bonds / NCDs via a broker or a SEBI-registered OBPP; start at /bonds/sebi-registered-platforms and compare platforms before you fund anything.
• New to all of it → begin with a small G-sec via RBI Retail Direct or a AAA bond through your existing broker. Understanding how charges work first helps — see /learn/how-does-brokerage-work.