Corporate bonds in India: what they pay and what they cost you
A corporate bond is a loan to a company rather than to a bank. Across the 179 listed bonds RightBonds tracks, corporate paper yields 10.6% on average and reaches 15% at the top, against roughly 6% to 7% on a fixed deposit of similar tenure. This guide covers what that extra return is buying, what each credit grade pays today, and the practical steps to owning one.
What a corporate bond actually is
You lend a fixed sum to a company for a fixed term. It pays a coupon on a set schedule (monthly, quarterly, half-yearly or annually) and returns the face value on the maturity date. Nothing is at the issuer's discretion: the coupon is a contractual obligation, which is why a bondholder ranks ahead of a shareholder if the company runs into trouble.
Almost every corporate bond a retail investor in India can buy is a non-convertible debenture (NCD), listed on the NSE or BSE and held in your own demat account. The issuers are mostly non-banking financial companies, microfinance lenders and housing finance firms, because those are the businesses that fund themselves by borrowing. A handful of manufacturing and infrastructure names list too.
Three distinctions worth carrying with you:
- Secured or unsecured. A secured NCD is backed by a charge over specific assets, so recovery in a default is better. It is not a guarantee of repayment, only a better place in the queue.
- Coupon or yield. The coupon is a fixed percentage of face value. The yield to maturity (YTM) is what you actually earn given the price you paid, and it is the only number worth comparing across bonds. See the bond yield calculator.
- Corporate or government. A government security carries sovereign credit and effectively no default risk. A corporate bond carries the company's credit, which is precisely why it pays more.
What corporate bonds yield in India right now
Yield and credit rating move together, in one direction. Reading down this table is reading up the risk scale.
| Grade | Meaning | Live yields (Aug 2026) |
|---|---|---|
| SOV | a sovereign instrument carrying the credit of the Government of India | 5.8% - 6.5% (avg 6.2%) |
| AAA | the highest credit-safety grade | 7.5% - 8.12% (avg 7.8%) |
| AA+ | a very high credit-safety grade | 8% - 9.05% (avg 8.6%) |
| AA | a high credit-safety grade | 7.75% - 10.5% (avg 9.1%) |
| AA- | a high credit-safety grade | 8% - 11.5% (avg 9.4%) |
| A+ | an adequate credit-safety grade | 7.5% - 11.25% (avg 10%) |
| A | an adequate credit-safety grade | 7.75% - 12.6% (avg 10.4%) |
| A- | an adequate credit-safety grade | 10.4% - 13.8% (avg 11.5%) |
| BBB+ | a moderate credit-safety grade | 9% - 13.9% (avg 11.7%) |
| BBB | a moderate credit-safety grade | 10.5% - 14.5% (avg 12.5%) |
| BBB- | a moderate credit-safety grade - the lowest investment-grade band | 9.5% - 15% (avg 12.6%) |
If a grade appears to pay far more than its neighbours, the market is pricing something specific about those issuers rather than handing out a bargain. Read the rating rationale, not just the number. Our bond ratings guide covers what each grade means and who assigns it, and each grade has its own page under browse by credit rating.
Which Indian companies pay the highest bond yields
The top of the market is consistently mid-tier NBFCs, microfinance institutions and small housing finance companies rated A, BBB+ or BBB. They pay more because they must: a bank can fund itself with deposits and the government can print rupees, while a mid-sized lender competes for money on price alone. The individual name at the top changes as prices and listings move, so any fixed answer goes stale within weeks.
Two live lists, rebuilt daily: highest-yield corporate bonds ranks every corporate listing by YTM, and browse by issuer shows every bond a given company has outstanding, which is the view you want before concentrating money in one name.
High return without the weakest credit
The most common mistake is treating the highest number on the page as the goal. Yield is the price of risk, so the top of a yield-sorted list is, by construction, the riskiest issuer on it. The more useful question is how much yield you can get without dropping to the bottom of investment grade.
That set exists and is not small: bonds still rated A- or better that yield 10% or more, which is one to eight rungs above BBB-, the lowest investment grade. High-yield bonds with strong credit ratings lists them sorted by rating first and yield second, so the strongest credit clearing the bar sits at the top rather than the weakest. For the full investment-grade universe, see investment-grade bonds.
The three risks, and they are not the same risk
- Default risk. The issuer stops paying. Nothing insures you against it. A bank FD carries DICGC cover up to ₹5 lakh; a corporate bond carries none. This is the risk the credit rating measures, and the only cheap defence is spreading money across issuers.
- Liquidity risk. Indian corporate bonds trade thinly outside the largest issues. Selling before maturity often means accepting a discount, and sometimes there is no bid at all. See selling bonds before maturity.
- Price risk. When interest rates rise, bond prices fall. This only bites if you sell early. Held to maturity with no default, you receive the yield you bought at, whatever happens to prices in between.
A credit rating speaks to the first risk only. It says nothing about whether you will find a buyer, or what price you would get from one.
What the yield is worth after tax
Coupon interest is taxed at your full slab rate, so the headline number is not what you keep. At a 30% slab a 12% coupon nets about 8.4%, while a 7% FD taxed the same way nets 4.9%. The real gap is around 3.5 points, not 5. Gains on a listed bond sold after 12 months are long-term capital gains taxed at 12.5%. Run your own slab through the post-tax yield calculator, and see tax on bonds in India for TDS and capital gains detail.
How to buy corporate bonds in India
- Open a demat account and complete KYC, if you do not have one already.
- Buy through a SEBI-registered online bond platform provider (OBPP), or on the NSE and BSE debt segment through your broker. RightBonds tracks 5 platforms; see what each currently lists under browse by platform.
- Check the rating, the issuer and the minimum investment before ordering. Minimums are set per listing and commonly run ₹10,000 to ₹1 lakh, so the same bond can need a different ticket on two platforms.
- Pay and the units settle into your demat account. Coupons credit to your linked bank account on the payout schedule.
The full walkthrough is in how to buy bonds in India. Starting small: bonds under ₹10,000 lists what a modest first ticket reaches. Holding a code already and want to identify the issue? Look it up in the ISIN directory.
Corporate bonds against a fixed deposit
An FD gives you a bank's credit, deposit insurance to ₹5 lakh, and a rate you can hold to. A corporate bond gives you a company's credit, no insurance, and several points more yield. Both are taxed on interest at your slab. Neither dominates: the bond wins on return and loses on safety and liquidity, which is exactly the trade the rating scale prices. Bonds vs fixed deposits works through the comparison in rupees, and the bond vs FD calculator does it for your own numbers and tenure.
Frequently asked questions
Which grade is your yield coming from?
Filter 179 live bonds by rating and yield together, and see what the extra return is actually buying.
Open the screenerWhat are corporate bonds in India?
A corporate bond is a loan you make to a company instead of to a bank. The company pays a fixed coupon on a fixed schedule and returns the face value on a stated maturity date. In India most retail-accessible corporate bonds are non-convertible debentures (NCDs) listed on the NSE or BSE, held in your own demat account, and issued largely by NBFCs, microfinance lenders and housing finance companies.
What do corporate bonds yield in India right now?
Across the 179 listed bonds RightBonds tracks in Aug 2026, yields to maturity average 10.6% and reach 15% at the top. A bank fixed deposit of comparable tenure pays roughly 6% to 7%. The gap is not free money: it is what the market charges for the issuer's credit risk, and it widens as the rating falls.
Which Indian companies pay the highest bond yields?
The top payers are almost always mid-tier NBFCs, microfinance institutions and small housing finance companies rated A, BBB+ or BBB. They pay more than banks or the government because they have to in order to raise money. The specific issuer at the top changes as prices and listings move, so a live list is more useful than a fixed name.
Can you get a high return from corporate bonds with low risk?
Not risk-free, but you can avoid the weakest credits and still beat an FD. Bonds rated A- or better that still yield 10% or more exist, and they sit one to eight rungs above the bottom of investment grade. That is a better trade than reaching for the highest number on the page, which is usually the riskiest issuer on it.
Are corporate bonds safe in India?
Safer than equity, riskier than a bank deposit. Corporate bonds carry no DICGC insurance, so a default is your loss. They are regulated instruments that settle into your own demat account, and each carries a rating from a SEBI-registered agency such as CRISIL, ICRA or CARE. Investment grade means BBB- or above; below that, default risk rises sharply.
How are corporate bonds taxed in India?
Coupon interest is taxed at your income slab rate, so a 12% coupon nets about 8.4% at a 30% slab. Gains on selling a listed bond held over 12 months are long-term capital gains taxed at 12.5%. TDS applies on interest from listed bonds. An FD is taxed the same way on interest, so tax narrows but does not close the gap.
What is the minimum investment in corporate bonds in India?
It is set per listing rather than by regulation, and commonly runs from about ₹10,000 to ₹1 lakh. The same bond can carry a different minimum on two platforms. Because the price paid includes accrued interest, the amount actually payable is usually not a round face value.
How do I buy corporate bonds in India?
You need a demat account and completed KYC. Then buy either through a SEBI-registered online bond platform provider (OBPP) or on the NSE and BSE debt segment through your broker. Units settle into your demat account and coupons credit to your linked bank account on the payout schedule.
What is the difference between a corporate bond and a government bond?
A government security carries sovereign credit and effectively no default risk, because the government can always repay in rupees. A corporate bond carries the company's credit and can default. That is why corporate paper pays several points more. Neither is free of price risk if you sell before maturity.
Can I sell a corporate bond before maturity?
Yes, on the exchange, but liquidity in Indian corporate bonds is thin outside the largest issues. Selling quickly often means accepting a discount, and on some listings there is no bid at all. Plan to hold to maturity and treat an early exit as a possibility rather than a guarantee.