What Are Bonds?

Bonds are fixed-income instruments that provide regular interest payments along with the principal amount at maturity. While bonds are widely popular in developed economies, India's bond market has historically been smaller. However, as bank FD rates decline, bonds are gaining traction among retail and HNI investors.

How Do Bonds Work?

Investors can purchase bonds via:

Primary Market (at issuance, at face value)

Secondary Market (on stock exchanges, at premium/discount depending on market interest rates)

A Demat account is required for trading bonds in the secondary market. Bonds pay periodic interest based on the coupon rate, and investors receive the face value at maturity. Bonds can also be sold before maturity at prevailing market prices.