I’m often asked how to buy corporate bonds in India without getting lost in jargon. The good news is that the path is clear once we separate the choices from the paperwork. Corp bonds are debt securities issued by companies to raise money; we lend to the issuer and receive interest (coupon) and principal on maturity. Here is a practical, compliance-friendly route that I follow.
1) Set the objective.
Before placing an order, I decide what I want the bond to do: periodic income, matching a future expense, or parking surplus for a defined period. With corp bonds, maturity, coupon frequency, credit quality, and liquidity must fit that purpose. I remind myself that higher yield usually reflects higher credit or liquidity risk.
2) Get the accounts in place.
To actually own a bond, I keep three things ready: a PAN-linked bank account, a demat account with NSDL/CDSL, and a trading relationship with a registered broker or a SEBI-regulated Online Bond Platform Provider (OBPP). Completing CKYC (with PAN, Aadhaar, photo, signature, and bank proof) is standard. Adding a nominee at this stage avoids later friction.
3) Shortlist and evaluate issues.
When I scan corp bonds, I start with the term sheet. I note the security (secured/unsecured), seniority, coupon type (fixed, floating, or step-up), frequency, day-count convention, put/call options, and minimum lot size. I check the latest ratings from agencies such as CRISIL, ICRA, or CARE and read any rating rationale or surveillance notes. If it is a public NCD issue, I review the offer document; if it is secondary market, I look at recent trades, outstanding size, and whether the bond is actively quoted on the exchange or RFQ.
4) Understand price and yield.
The coupon on corp bonds is not the same as return. What matters is Yield-to-Maturity (YTM), which reflects the price I pay today, remaining cash flows, and time to maturity. I also account for accrued interest: bonds often trade “dirty price” (clean price plus accrued), so my contract value typically includes this component. A quick yield comparison across similar tenors keeps me from overpaying.
5) Place the order the right way.
For a public NCD, I apply during the bidding window via my broker or OBPP, choose the series (different tenors or payout options), and authorize payment through ASBA/UPI. On allotment, the units credit to my demat.
For secondary purchases, I can place a limit order on the exchange order book or request quotes on the RFQ route through my intermediary. I confirm quantity, price, settlement cycle, and charges (brokerage, GST, stamp duty). Post-trade, I receive a contract note; bonds typically settle quickly and appear in the demat account soon after, followed by periodic interest as per the record dates.
6) Track, document, and review.
After purchase, I monitor announcements, interest credits, and any corporate actions such as early redemption. I store the term sheet and contract note, keep an eye on rating movements, and reassess if my goals change. Tax treatment depends on prevailing law: coupon is generally taxed as income, while capital gains on sale or redemption are taxed as per the holding period and the listing status. I consult a tax professional when in doubt.
A quick checklist I rely on: clear goal, KYC + demat + trading access, read the term sheet, compare YTM not just coupon, verify liquidity, place orders through regulated channels, and keep records updated.
If you’re mapping how to buy corporate bonds in India, this sequence brings order to the process and helps you make decisions with clarity. With a sound checklist and regulated execution, corp bonds can serve defined income or allocation needs while keeping the investor in control.
