As per RBI’s words, A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) that borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money to finance a variety of projects and activities. Owners of bonds are debtholders, or creditors, of the issuer.
In India, the bond market contains many types of bonds which can generate a regular passive income for any person. some of the main types of bonds are discussed below which are traded frequently in the Secondary Market(Stock Exchanges) and also in Primary Market(RBI or CCIL).
Government Bonds are debt instrument which comes with the highest safety, here government borrows money from the public for spending and In return provides a regular interest income to the lender. Generally, Government bonds are treated as a Risk Free Asset because the government of a country makes the commitment to repay the maturity and any interest amount of bonds at the end of the bond tenure. Government Bonds have a Sovereign Rating which is the highest rating for any debt instrument.
Corporate bonds are also a debt instrument where corporate borrows money for capital generation purpose or for spending purpose. Here these bonds are issued by a privately or publically owned company or bank. Generally, corporate bonds are treated as risky compared to government bonds because corporate have always a risk of default. Because of this default risk, every company is rated by rating agencies with different ratings as per their risk on capital for an investor. many times Non Convertiable Debentures and Bonds are used interchangeably in India.
Sovereign Gold Bonds(SGBs) are government securities or Government bonds which are denominated in grams of gold. They are the substitutes for holding physical gold. Investors have to pay the issue price which depends on the real gold price as per IBJARates in cash and the bonds will be redeemed in cash on maturity date at the price of gold as per IBJARates on the date of maturity. These Bonds are issued by Reserve Bank on behalf of the Government of India just like other government bonds.
If you are thinking to earn more than a fixed deposit then you can choose bonds and debentures as your fixed income source. Here in bonds and debentures, returns are fixed if you are invested till maturity, for example, if we check data related to bonds then we can see that corporate bonds and debentures can generate 1-5% returns higher than a fixed deposit. Generally, corporate bond’s returns depend on the risk, if the risk is high then we can expect higher returns and if the risk is low then we can expect a return near to FD or in the range of 1-2% above FD rates. In government bonds, we can invest without thinking about any default risk. Generally, government bonds provide returns higher than fd but lower than corporates because of the risk factor in Investment.
Now, most probably many of you are thinking about buying these bonds so that you can generate a regular passive income from your investment. Here you can use our data for your information purpose. We have provided most of the data related to government bonds, publically issued corporate bonds and gold bonds. By using this information you can buy your bonds.
All of these bonds are listed on stock exchanges you can easily buy your favourite bond from stock exchanges without paying any commission to a commission agent. Here you just need a Broking Account to place an order and a Demat Account to hold the securities in which you want to invest just like you do for stocks.
if you have any doubts or questions on bonds then let us know in the comment section.
Ninja Hathoudi Sept. 6, 2023, 9:11 a.m.
If I buy GOI 6.76 % bond of 2061 (on No 98 in the table) shall I be getting money in the compounding at end of 2061 ?
Mytreayee Joshi Nov. 12, 2021, 10:48 a.m.
Goi bonds are issued by government but is it available to common public, on exchange
Mytreayee Joshi Nov. 12, 2021, 10:45 a.m.
Goi bonds are issued by government but is it available to common public, on exchange
Sunny Seth - Admin Comment March 4, 2021, 11:51 p.m.
Post your Queries here! I will be glad to solve your Questions on Indian Bond Market