Invest in Stable Returns with Bonds

A bond is a fixed-income debt instrument where an investor lends money to an issuer a company, government, or institution for a defined period at a fixed or floating interest rate. The issuer pays periodic interest (the coupon) and repays the principal at maturity. Bonds provide predictable income, protect capital from equity market swings, and are a building block of any balanced portfolio. In India, bonds are now accessible to retail investors starting at ₹1,000 through G-Secs, corporate bonds, and SGBs.

In India, you can invest in: (1) Corporate Bonds issued by companies; (2) Government Bonds / G-Secs issued by RBI on behalf of the Central/State Government; (3) PSU / Quasi-Government Bonds issued by government-backed institutions like NHAI, REC, NABARD; (4) Tax-Free Bonds PSU-issued bonds where interest is fully tax-exempt; (5) Sovereign Gold Bonds (SGBs) gold-linked bonds issued by RBI; (6) Commercial Papers short-term bonds for HNIs issued by top-rated corporates.

Yes. Most bonds listed on NSE or BSE can be sold in the secondary market during market hours through your Ventura trading account just like selling shares. For SGBs, premature exit is allowed from Year 5 onwards on interest payment dates, or you can sell on NSE/BSE at any time. Unlisted bonds may have limited liquidity and always check listing status before investing.

Most listed bonds have no hard lock-in you can sell them on the exchange at any time. Sovereign Gold Bonds have an 8-year tenure, but early exit is allowed from Year 5 on interest payment dates. 54EC Tax-Saving Bonds (NHAI, REC) have a mandatory 5-year lock-in for the capital gains exemption to apply. Tax-Free Bonds have no lock-in tradeable on exchange throughout.

Generally, yes. Bonds have a defined maturity date and a promised return (coupon), which stocks do not. For Government Bonds (G-Secs) and SGBs, there is sovereign backing with virtually zero risk of loss. For AAA-rated corporate bonds and PSU bonds, the risk is very low. However, bonds carry interest rate risk (prices fall when rates rise) and credit risk (if the issuer defaults). Overall, bonds are significantly less volatile than equities.

A bond’s yield represents your actual return. The coupon rate is fixed, but the yield changes with the market price. If you buy a bond at a discount (below face value), your yield is higher than the coupon. If you buy at a premium, your yield is lower. Yield to Maturity (YTM) is the most important metric that tells you the annualised return if you hold the bond until it matures, accounting for the purchase price, coupon payments, and time to maturity.

Tax-Free Bonds are long-term bonds issued by government-backed PSUs (like NHAI, NABARD, REC) where the interest income is completely exempt from income tax under Section 10(15)(iv)(h) of the Income Tax Act. No TDS is deducted, and you do not need to declare this income as taxable. They are AAA-rated and listed on NSE/BSE. For investors in the 20% or 30% tax bracket, tax-free bonds deliver significantly better post-tax returns than equivalent taxable instruments.

Open a free Demat & Trading account with Ventura if you don’t have one already. Navigate to the Bonds section, filter by type, rating, or yield, and click Invest Now on any bond. Your investment is settled in T+1 or T+2 days and reflected in your Demat account. You can track returns, monitor maturity dates, and manage your entire bond portfolio from the Ventura platform or mobile app.