According to a Finance Ministry press release dated January 2026, India’s corporate bond market witnessed impressive growth over the last decade. The outstanding issue increased from Rs. Rs 17.5 lakh crore in FY 2015. 53.6 lakh crore in financial year 2025. The annual growth rate has been around 12%. FY 2025 sees new issuances of Rs. 9.9 lakh crore, highest ever.
Corporate bond fund raising now supplements bank credit. During April to December 2025, the contribution of the debt market to the total resource mobilization from the primary market was more than 63%. Since so many corporates are raising funds by issuing bonds and the bond market offers 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 enable it.
investing in bonds
Some reasons why a person should consider investing in bonds include the following.
- asset allocation
An individual should create a diversified investment portfolio by allocating money across different asset classes. Each asset class plays a different role.
- Home equity is for growth.
- Fixed income is for stability and regular cash flow
- Gold is a hedge against inflation and a safe haven during uncertainty
- International equities are for growth, exposure to international companies not listed in India, hedging against country-specific risk and INR depreciation.
As mentioned above, an individual must allocate a portion of his investments to fixed income products. These may include bank fixed deposits, government and corporate bonds, EPF, government small savings schemes, etc.
As part of a fixed income allocation, one may consider investing in bonds. When equities are volatile, fixed income can provide much-needed stability to the overall investment portfolio. When equities are falling in the short term, fixed income can act as a shock absorber, supporting the overall investment portfolio. With asset allocation, a person can create a diversified investment portfolio that can deliver better risk-adjusted returns.
- Regular and predictable cash flow
At the time of issuing a bond, the issuer specifies the face value, coupon rate, and other details of the bond. After issuance, the bonds can be listed on stock exchanges. Bond prices fluctuate depending 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 make payments at the specified coupon rate at the specified frequency. For example, suppose the face value of the bond is Rs. 100 and the coupon rate is 8%. The bond issuer will pay Rs. Annually 8. If the frequency of coupon payment is semi-annually, the bond issuer will pay Rs. At half yearly intervals.
So, if a person is looking for regular, predictable cash flow, bonds can provide them. Depending on the frequency of cash flows required, one can select bonds. For example, a retiree or someone seeking monthly income may invest in a bond that pays monthly interest. Similarly, if one needs quarterly, half-yearly or annual cash flows, they can choose the bond accordingly.
- investment opportunities
As India’s GDP is growing rapidly, many institutions 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 to borrow Rs. 11.7 lakh crore through dated securities (G-Secs). As of March 2026, the 10-year G-Sec is yielding around 6.50% which is better than or at par with the fixed deposit interest rates of many banks.
Bonds of state governments (SDLs) offer higher yields than G-Secs of the central government. Budget 2026 announced incentives for municipalities raising funds by issuing bonds. Therefore, in 2026 and beyond, we may see more bond issuances from municipal corporations. They give higher yield 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 previous section, we saw that the corporate bond market has grown about 12% annually over the past decade. FY 2025 sees new issuances of Rs. 9.9 lakh crore, highest ever.
We can expect this trend to continue, with governments and corporates tapping bond markets to raise funds. It offers a variety of bonds for investors to choose from for investment. Investors can choose bonds based on issuer (Govt., PSU, Bank, Corporate), credit rating, coupon rate, coupon payment frequency, availability of collateral, tenure, etc. or a combination of these.
- The emergence of bond investment platforms
In the previous section, we saw that many entities, such as central, state and municipal governments, public sector undertakings, banks and corporates are tapping bond markets to raise funds. For a retail investor, it can be challenging to keep track of all the issuers.
Online bond platform providers (OBPPs) address this challenge for retail investors. OBPPs are SEBI-regulated intermediaries that act as marketplaces, listing bonds of different issuers at one place.
A retail investor needs to register once, 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 or not. Therefore, OBPP has made it easier for retail investors to check and move ahead with the bonds of various issuers available for investment.
Some of the OBPPs registered with NSE include the following:
- Bondbazaar Securities Pvt. Ltd.
- Grip Broking Pvt. Ltd.
- FourDegreeWater Services Pvt. Ltd. (Vint Wealth)
- India Bond Pvt. Ltd. (Indiabonds)
- Giraffe Platform Pvt. Ltd.
- Launchpad Fintech Pvt. Ltd. (BondsIndia)
- Espero Markets Pvt. Ltd.
- Rays Securities Pvt. Ltd (Money)
- Southwest Broking Pvt. Ltd. (BondScanner)
With digitization, an investor from any part of the country can log in to the OBPP website/app and invest in any of the bonds listed. The government and capital markets regulator, SEBI, have simplified KYC norms to make investing in bonds easier for retail investors. Once an investor completes his centralized KYC, he can invest in bonds through any OBPP.
How much should you invest?
We have discussed various reasons to invest in bonds, such as higher interest rates compared to most other fixed income products, asset allocation and portfolio diversification, easy access through OBPP, greater number of investment opportunities, etc. Consult a financial advisor to decide which bonds to invest in and what percentage of your portfolio to allocate to bonds. 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.