How to Invest in Bonds in India – Types, Returns & Platforms

More and more Indian investors are turning to bonds in 2025 and for good reason. With rising interest rates and market volatility, many are looking for safer, more predictable ways to grow their wealth. Bonds offer just that: fixed returns, steady income, and far less uncertainty compared to equities.

Today, anyone with a demat account and a few thousand rupees can access a wide range of bonds through trusted digital platforms. 

In this guide, we’ll break down how bonds work, what makes them a smart option in 2025, and how platforms like Dhanush by Ashika are making it easier than ever to get started.

What Are Bonds? Understanding the Basics

A bond is a debt instrument issued by companies, governments, or other entities to raise capital. When you invest in a bond, you’re essentially lending money to the issuer. In return, the issuer pays you regular interest (the coupon), typically ranging from 8% to 14% annually, and repays your principal at maturity. Unlike stocks, bonds do not give you ownership in the company; instead, they offer a contractual promise of fixed returns and capital protection.

Key Bond Terms:

• Coupon Rate: The annual interest you’ll earn.
• Maturity Date: When your principal is repaid.
• Payment Schedule: How often you receive interest (monthly, quarterly, annually).

Bonds are favoured for their steady income, lower risk compared to equities, and ability to bring stability to an investment portfolio.

Types of Bonds Available in India

India’s bond market offers a variety of options, each suited to different investment goals and risk appetites:

• Government Bonds: Issued by central or state governments, these are considered the safest, ideal for conservative investors.
• Corporate Bonds: Issued by companies, they offer higher yields but come with slightly higher risk.
• Tax-Free Bonds: Issued by government-backed entities, these provide tax-exempt interest income, making them attractive for high-income investors.
• Convertible Bonds: Can be converted into equity shares under certain conditions, offering flexibility.
• Zero Coupon Bonds: Issued at a discount, pay no periodic interest, and are redeemed at face value on maturity.

Why Invest in Bonds in 2025?

Bonds are regaining popularity among Indian investors for several reasons:

• Steady Income: Regular interest payouts provide predictable cash flow.
• Capital Protection: Lower risk of capital loss compared to stocks.
• Portfolio Diversification: Adding bonds reduces overall portfolio volatility.
• Tax Benefits: Especially with tax-free and government bonds, which can significantly boost net returns.
• Accessibility: Digital platforms now allow investments starting as low as ₹1,000.

How to Invest in Bonds in India

1. Choose a Trusted Platform

Today, digital investment platforms simplify the bond-buying process. Dhanush, in collaboration with Grip Invest, is one of the leading options for Indian investors. It offers curated, SEBI-regulated bonds and securitised debt instruments (SDIs), helping you build a fixed-income portfolio with ease.

2. Complete KYC

Most platforms require digital KYC. It’s a simple, one-time process that verifies your identity and links your demat account.

3. Browse and Compare Bonds

Look at key factors such as:

• Credit Rating: AAA is the highest safety; lower ratings may offer better yields.
• Yield to Maturity (YTM): Indicates the total return if held to maturity.
• Maturity Tenure: Choose between short-term flexibility and long-term returns.

4. Make an Investment

After selecting a bond, you can invest directly through the platform. Your bonds are credited to your demat account, and your interest income is deposited into your linked bank account.

5. Track Your Portfolio

Use the platform’s dashboard to monitor investments, view payment history, and explore reinvestment or early exit options, if available.

Why Dhanush to Invest in Bonds?

• ✅ SEBI-registered and an NSE member
  
• ✅ Curated selection of bonds and SDIs rated by CRISIL and ICRA
  
• ✅ Earn up to 14% annual returns
  
• ✅ Monthly or quarterly interest payouts
  
• ✅ Easy digital onboarding and KYC
• ✅ No hidden charges or complicated documentation
• ✅ Low minimum investment, starting at ₹1,000
• ✅ Option to diversify across multiple issuers and asset types

Getting Started Is Easy:

1. Complete KYC online.
2. Choose a bond based on your preference.
3. Pay and start earning—usually within one working day.
4. Receive interest payments directly into your bank account.

Ready to invest? Explore Dhanush’s bond platform now.

Things to Keep in Mind Before You Invest

• Credit Rating: Always check the issuer’s credit rating. Higher ratings mean lower risk, while lower ratings may offer higher returns but greater risk.
• Maturity Alignment: Match bond tenure with your financial goals. Shorter maturities provide flexibility; longer ones may offer better rates.
• Interest Rate Impact: Rising rates can reduce bond prices, and vice versa.
• Tax Implications: Interest from most bonds is taxable, but tax-free bonds offer significant exemptions
• Diversification: Spread investments across various bonds, maturities, and issuers to minimise risk.

Conclusion

Bond investing in India has evolved. With attractive returns, lower risk, and easy access via digital platforms, bonds are becoming a core part of modern portfolios. 

With digital platforms like Dhanush making access easier than ever, bond investing is a smart move for Indian investors in 2025.

Ready to build a stable, income-generating portfolio? Explore Dhanush by Ashika’s bond market today: https://mydhanush.com/bond