Investin Bonds in IndiaGovernment Bonds & NCDs

A bond is a fixed-income instrument through which you lend money to a government or a company for a defined period. The borrower pays you regular interest (coupon) at a pre-agreed rate and returns your full principal at maturity. Bonds provide fixed, predictable returns — unlike equities, where returns are market-linked and variable.

NCD stands for Non-Convertible Debenture. It is a type of listed corporate debt security that cannot be converted into equity shares of the issuing company. NCDs are issued primarily by NBFCs, Housing Finance Companies, and large corporations, and are listed on NSE and BSE following the public issue. They are regulated by SEBI under the Issue and Listing of Non-Convertible Securities Regulations, 2021. Top-rated NCDs currently offer coupon rates of approximately 9% to 10.5%+ per annum.

YTM is the total effective annualised return you earn if you purchase a bond at the current market price and hold it until its maturity date — accounting for all coupon payments and the difference between the purchase price and face value at maturity. It is the most accurate measure of what a bond will actually return to you. A bond with a 9% coupon purchased at a premium (above face value) will have a YTM below 9% — and vice versa for a bond purchased at a discount. Always evaluate bonds using YTM rather than coupon rate alone.

Yes — if the bond is listed on NSE or BSE, it can be sold on any trading day at the prevailing secondary market price. However, the realised price may differ from your original purchase price, depending on current interest rate levels and secondary market liquidity. Investors who hold bonds to maturity receive the face value and all promised coupon payments as scheduled. For unlisted bonds or those with limited secondary market activity, premature exit options are more restricted.

SGBs are Government of India securities denominated in grams of gold — each unit represents 1 gram. They offer a fixed coupon of 2.5% per annum on the original investment amount (taxable), plus capital appreciation linked to the market price of gold. Capital gains at maturity (8 years) are exempt from capital gains tax for resident individuals. SGBs combine gold price exposure with a fixed income element and tax efficiency — making them a unique asset class. Suitability depends on your investment goals, gold price outlook, and investment horizon.

Both bonds and bank FDs offer fixed returns over a fixed tenure. Key differences: listed bonds are tradeable on stock exchanges (providing secondary market liquidity), often offer higher yields than bank FDs, and certain types (tax-free bonds, SGBs) offer tax advantages. Bank FDs are simpler to access, are covered by DICGC insurance up to ₹5 lakh per depositor per bank, and are available directly through any scheduled commercial bank. Corporate bonds and NCDs require a Demat account and a basic assessment of issuer credit risk.

Government of India securities (G-Secs) carry the sovereign guarantee of the Government of India — meaning both principal and interest are guaranteed by the central government. They are considered the safest fixed-income investment in India with effectively zero credit risk. Yields are correspondingly lower than corporate bonds (approximately 6.5–7.5% per annum), reflecting this superior safety.

For most bonds — both government securities and corporate bonds — coupon income is taxable as 'Income from Other Sources' at the investor's applicable income tax slab rate. Tax-free bonds (issued by entities such as NHAI, REC, and PFC under specific government notifications) are an exception: interest from these bonds is fully exempt under Section 10(15)(iv)(h) of the Income Tax Act, 1961. Capital gains on SGB redemption at maturity are exempt for resident individuals. Investors are advised to consult a Chartered Accountant for personalised tax guidance.

Government securities (G-Secs) are available for retail investors on NSE and BSE with a face value of ₹1,000 per unit. Listed NCDs on the secondary market are typically available at market price per unit (with ₹1,000 face value). New NCD public issues generally have minimum application amounts of ₹10,000. SGBs are issued in denominations of 1 gram of gold. Minimum investment amounts vary by instrument and issuer; Ashlar India displays these clearly for each available product.

Ashlar India provides retail clients with access to Government of India securities through the NSE and BSE platforms — where G-Secs are available for retail investors. You can buy and sell G-Secs directly through your Ashlar India trading account, with holdings reflected in your linked Demat account — using the same platform you use for equity and other listed investments.