According to a Ministry of Finance press release dated January 2026, India’s corporate bond market saw impressive growth in the last decade. The outstanding issuances increased from Rs. 17.5 lakh crores in FY 2015 to Rs. 53.6 lakh crores in FY 2025. The annual growth rate has been around 12%. The financial year 2025 saw fresh issuances of Rs. 9.9 lakh crores, the highest-ever.
Corporate bond fund raising now complements bank credit. During April to December 2025, the debt market accounted for over 63% of the total resource mobilisation from the primary market. With so many corporates raising funds through bond issuances and the bond markets presenting so many investment opportunities, should retail investors like you and me invest in bonds? In this article, we will explore investing in bonds and the factors that can enable it.
Investing in bonds
Some reasons why an individual must consider investing in bonds include the following.
- Asset allocation
An individual must build a diversified investment portfolio by allocating funds across different asset classes. Each asset class plays a distinct role.
- Domestic equity is for growth.
- Fixed income is for stability and regular cash flows
- Gold is a hedge against inflation and a safe haven during uncertainty
- International equity is for growth, exposure to international companies not listed in India, a hedge against country-specific risk, and INR depreciation
As mentioned above, an individual must allocate a part of their investment towards fixed-income products. These can include bank fixed deposits, Government and corporate bonds, EPF, Government small savings schemes, etc.
As part of fixed-income allocation, the individual can consider investing in bonds. When equities are volatile, fixed income can provide the much-needed stability to the overall investment portfolio. When equities are falling in the short term, fixed income can act as a shock absorber, cushioning the overall investment portfolio. With asset allocation, an individual can build a diversified investment portfolio that can deliver better risk-adjusted returns.
- Regular and predictable cash flows
At the time of bond issuance, the issuer specifies the bond face value, coupon rate, and other details. Post issuance, the bond may be listed on the stock exchanges. Bond prices fluctuate based on factors such as market interest rates, demand and supply, etc.
As bond prices change, yields change. However, the coupon remains unchanged, and the issuer continues to pay at the specified coupon rate at the specified frequency. For example, suppose the bond has a face value of Rs. 100 and the coupon rate is 8%. The bond issuer will pay Rs. 8 annually. If the coupon payment frequency is half-yearly, the bond issuer will pay Rs. 4 at half-yearly intervals.
So, if an individual is looking for regular, predictable cash flows, bonds can provide them. Depending on the frequency of cash flows required, an individual can select bonds. For example, a retired individual or someone seeking a monthly income can invest in a bond that pays monthly interest. Similarly, if someone needs quarterly, half-yearly, or yearly cash flows, they can choose the bonds accordingly.
- Investment opportunities
As India’s GDP grows at a faster rate, many entities are turning to bond markets to raise funds for various purposes. These include Central Government, State Governments, Municipal Corporations, private and public sector banks, public sector enterprises, corporates, etc.
In Budget 2026, the Central Government announced borrowing of Rs. 11.7 lakh crore through dated securities (G-secs). As of March 2026, the 10-year G-sec is offering a yield of around 6.50% which is better than or at par with fixed deposit interest rates of many banks.
The bonds of State Governments (SDLs) offer higher yields than the Central Government G-secs. Budget 2026 announced incentives for Municipalities raising funds through bond issuances. So, in 2026 and beyond, we may see more bond issuances from Municipal Corporations. They offer higher yields than the Central and State Governments.
Apart from Governments, we will see corporates tapping the bond markets to raise funds for various purposes. In the earlier section, we saw that the corporate bond market has grown around 12% annually in the last decade. The financial year 2025 saw fresh issuances of Rs. 9.9 lakh crores, the highest-ever.
We can expect this trend to continue, with Governments and corporates tapping the bond markets for raising funds. It gives investors a wide variety of bonds to choose from for investment. The investors can choose bonds based on issuer (Government, PSU, bank, corporate), credit rating, coupon rate, coupon payment frequency, availability of collateral, tenure, etc., or a combination of these.
- Emergence of bond investing platforms
In the earlier section, we saw that many entities, such as Central, State, and Municipal Governments, PSUs, banks, and corporates are tapping the bond markets to raise funds. For a retail investor, keeping track of all issuers can be challenging.
Online Bond Platform Providers (OBPPs) solve this challenge for retail investors. The OBPPs are SEBI-regulated intermediaries that function as marketplaces, listing bonds from various issuers at a single place.
A retail investor needs to do a one-time registration, log in to the dashboard, and view the listed fixed-income securities. They can check the details of a bond and decide whether to invest. So, the OBPPs have made it easier for retail investors to check the bonds from various issuers available for investing and proceed with them.
Some of the OBPPs registered with the NSE include the following:
- Bondbazaar Securities Pvt. Ltd.
- Grip Broking Pvt. Ltd.
- Fourdegreewater Services Pvt. Ltd. (Wint Wealth)
- India Bond Pvt. Ltd. (IndiaBonds)
- Jiraaf Platform Pvt. Ltd.
- Launchpad Fintech Pvt. Ltd. (BondsIndia)
- Aspero Markets Pvt. Ltd.
- Raise Securities Pvt. Ltd. (Dhan)
- Sustvest Broking Pvt. Ltd. (BondScanner)
With digitisation, an investor from any part of the country can log in to the OBPP website/App and invest in any bond listed. The Government and the capital market regulator, SEBI, have simplified KYC norms to make it simpler for retail investors to invest in bonds. Once an investor has completed their centralised KYC, they can invest in bonds through any OBPP.
How much should you invest?
We have discussed various reasons for investing in bonds, such as higher interest rates than those of most other fixed-income products, asset allocation and portfolio diversification, easy access through OBPPs, higher number of investment opportunities, etc. To decide which bonds to invest in and what percentage of your portfolio to allocate to bonds, consult a financial advisor. A financial advisor will evaluate your risk profile and other factors and recommend the percentage of portfolio allocation to bonds and which bonds to invest in.
