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Yield (% Return)

This is indicative % returns on your bond investments

Balance tenure

Time period after which your initial investment is paid back

Interest payment frequency

Time period between two interest payments on your bond

Credit rating

This shows the safety of the issuer. Higher the rating - safer the bond

Bank Bonds

Bank Bonds are an attractive investment option for investors seeking a steady stream of high income. In India, banks have been issuing bonds to meet their capital requirements. Explore through a wide range of top Bank Bonds in India basis their type and their seniority. Invest easily in Bank Bonds online with IndiaBonds.

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Yield (% Return)

This is indicative % returns on your bond investments

Balance tenure

Time period after which your initial investment is paid back

Interest payment frequency

Time period between two interest payments on your bond

Credit rating

This shows the safety of the issuer. Higher the rating - safer the bond


Esaf Small Finance Bank Limited

Coupon

11.0000%

Maturity

Apr 2030

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

11.3500%

Price

₹ 1,00,980.12

Au Small Finance Bank Limited

Coupon

10.7500%

Maturity

Feb 2029

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

9.5000%

Price

₹ 1,06,916.50

Yes Bank Limited

Coupon

9.0000%

Maturity

Mar 2026

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2

Yield

9.5000%

Price

₹ 9,98,232.11

Yes Bank Limited

Coupon

9.1500%

Maturity

Jun 2025

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2

Yield

9.4000%

Price

₹ 10,72,981.00

Bond Name Coupon Maturity Rating Interest Payment Yield Price Action

ESAF SMALL FINANCE BANK LIMITED

11.0000

Apr 2030

CARE A

Semi Annual

11.3500%

₹ 1,00,980.12

Read More

AU SMALL FINANCE BANK LIMITED

10.7500

Feb 2029

CARE A

Monthly

9.5000%

₹ 1,06,916.50

Read More

YES BANK LIMITED

9.0000

Mar 2026

CARE A

Annual

9.5000%

₹ 9,98,232.11

Read More

YES BANK LIMITED

9.1500

Jun 2025

CARE A

Annual

9.4000%

₹ 10,72,981.00

Read More

Note: Pursuant to the provisions of Section 193 of Income Tax Act, 1961, as amended, with effect from, 1st April 2023, TDS will be deducted @ 10% on any interest payable on any security issued by a company (i.e. securities other than securities issued by the Central Government or a State Government). The listing of products above should not be considered an endorsement or recommendation to invest. Please use your own discretion before you transact. The listed products and their price or yield are subject to availability and market cutoff times.

Features of Bank Bonds

Fixed and stable Returns - Bank Bonds offer a fixed rate of coupon which is agreed upon at the time of issuance. This coupon rate is relatively high and remains the same throughout the tenure of the bond.

Tenure – Bank Bonds have a fixed tenure, which can range up to several years. At the end of the tenure, the investor receives the principal amount along with the final coupon payment.

Credit Rating – Bank Bonds are rated by credit rating agencies like CRISIL, CARE, ICRA etc. These ratings indicate the creditworthiness of the issuing bank and can help investors assess the risk involved in investing in a particular bank bond.

What are Bank Bonds?

Basel III norms are global rules that empower banks and make them stronger. Indian banks also have to follow these rules, which require them to have more money saved up and be prepared for any obstacles. Banks constantly require money for growth, in addition to meeting their working capital requirements; they have to maintain certain monetary thresholds to safeguard during challenging financial situations. Banks can issue Senior bonds, Tier 2 capital bonds and additional Tier 1 (AT1) bonds to meet these Basel III capital requirements commonly referred to as "Bank Bonds." While these banks also issue FDs, Bank Bonds are a better investment alternative as they help investors earn a relatively higher yield. FDs have a lock-in and hence are illiquid, whereas Bank Bonds can be traded in the secondary market anytime and also do not attract penalties, unlike Fixed Deposits.





Issuers of Bank Bonds

As of July 2022, there are Rs. 75,000 crore worth of AT1 Bonds trading in the market, and Rs. 1,25,000 crore worth of Tier 2 Bonds being actively traded in the secondary market. More than 85-90% of PSU banks issue Bank Bonds in India.

To buy Bank Bonds, it is important to remember that not all Bank Bonds in India are created equal. Generally, these bonds fall into three categories:

Bank Senior Bonds: They are issued to fund long-term infrastructure projects. Although unsecured, they are on par with the bank's depositors and other uninsured/unsecured creditors and have a minimum term of 7 years. There are no embedded options in this bond.

Tier 2 Bonds: Banks issue subordinated Tier 2 bonds to fulfill their Tier 2 capital requirements. These bonds have a minimum term of five years and are unsecured and subordinated to depositors, unsecured creditors, and senior bonds of the bank. Bank Tier 2 bonds only have a Call Option, which allows the bank to repay the bonds early after five years. Bank Tier 2 bonds pay a higher interest rate than senior bonds due to their loss absorption feature.

AT1 Bonds: AT1 bonds are unsecured, subordinated to Tier 2 bonds. They have a 5-year call option. AT1 bonds are perpetual, meaning they have no maturity date and pay a high coupon rate. AT1 bonds carry a minimum ticket size of Rs 1 crore. They come with the loss absorption feature i.e. if the issuer's capital position deteriorates, the value of the AT1 bonds may be written down or converted into equity to help strengthen the issuer's balance sheet.

  • State Bank of India
  • PNB
  • Bank of Baroda
  • Canara Bank
  • Bank of India
  • Union Bank of India
  • ICICI Bank
  • Union Bank of India
  • Axis Bank
  • IndusInd Bank
  • HDFC Bank
  • South Indian Bank
  • UCO Bank
  • Indian Overseas Bank
  • Karnataka Bank
  • DCB Bank
  • J&K Bank
  • Central Bank of India
  • IDBI Bank
  • Karur Vysya Bank
  • Indian Bank
  • Yes Bank



Benefits of Bank Bonds

Safety

Reserve Bank of India ensures that banks are highly regulated and secure, making the banking sector one of the safest. The Indian government's majority shareholding in many PSU banks also contributes to their stability during difficult times.

Portfolio Diversification

Bank Bonds provide diversification to an investor's portfolio by offering a distinct risk profile from other investments such as equities, mutual funds, or real estate.

No lock-in period

Bank Bonds can be sold anytime as they are tradable on exchanges.

Better Returns

Earn higher income with Bank Bonds compared to Fixed Deposits.

Less Volatile

Compared to unpredictable equity markets, Bank Bonds prices are more stable.

Potential capital appreciation

If the issuer's profile or interest rates improve.

What is the Procedure to buy Bank Bonds?

You can invest in Bank Bonds either through a Bond Public Issue when the Bond first enters the market or trade the existing bonds in the market through the secondary market via stock exchanges. Invest with ease in Bank Bonds through IndiaBonds


Signup

To purchase Bank Bonds online, The first step is to sign up on Indiabonds.com

1

Complete KYC

Complete your KYC online in less than 3 mins! There is no need to complete any paperwork or make any uploads.

2

Browse Curated Packs

Browse the curated packs and select Bank Bonds on the explore Page to view a variety of Bank Bonds for investments.

3

SignUp Step
SignUp Step4

Pick your choice

Pick your choice of Bank Bonds from a curated list of Bank Bonds on our website.

4

Get detailed reports

Click Read more to get detailed issue reports like interest payment frequency and to calculate your investment as against the final payout.

5

Invest in Bank Bonds Online

To invest, simply click on “Buy this Bond” and complete your transaction via net banking. Once your transaction has been settled by the exchange the bond will be credited to your demat account.

6

Connect with your Bond Managers

In case you are not sure how to invest in Bank Bonds, you can reach out to our Bond Managers who will help you buy Bank Bonds online.

7

Click on "Buy this Bond"

Click on “Buy this Bond” and submit your details. The Bond Managers will help you with the rest. That’s about it.

6

Connect with your Bond Managers

In case you are not sure how to invest in Bank Bonds, you can reach out to our Bond Managers who will help you buy Bank Bonds online

7

Discover our Curated Packs

AXIS FINANCE LIMITED

Coupon

8.2900%

Maturity

Aug 2027

Rating

CARE  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

8.1700%

Price

₹ 1,00,646.54

EARLYSALARY SERVICES PRIVATE LIMITED

Coupon

11.7500%

Maturity

Dec 2025

Rating

CARE  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

13.2500%

Price

₹ 1,00,083.21

MAHINDRA AND MAHINDRA FINANCIAL SERVICES LIMITED

Coupon

8.2500%

Maturity

Mar 2027

Rating

CRISIL  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

8.1700%

Price

₹ 1,02,228.87

TATA CAPITAL LIMITED

Coupon

8.0980%

Maturity

Jan 2027

Rating

CRISIL  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

8.1500%

Price

₹ 1,03,226.96

NEOGROWTH CREDIT PRIVATE LIMITED

Coupon

12.5500%

Maturity

Aug 2025

Rating

ICRA  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.0000%

Price

₹ 1,01,582.84

SATYA MICROCAPITAL LIMITED

Coupon

13.8500%

Maturity

Jul 2029

Rating

CRISIL  BBB+

Type of Bond

Subordinate Debt

Yield

14.7560%

Price

₹ 1,00,683.01

EARLYSALARY SERVICES PRIVATE LIMITED

Coupon

11.7500%

Maturity

Dec 2025

Rating

CARE  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

13.2500%

Price

₹ 1,00,083.21

NEOGROWTH CREDIT PRIVATE LIMITED

Coupon

12.5500%

Maturity

Aug 2025

Rating

ICRA  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.0000%

Price

₹ 1,01,582.84

INDIABULLS HOUSING FINANCE LIMITED

Coupon

8.8500%

Maturity

Sep 2026

Rating

CRISIL  AA

Type of Bond

Secured - Regular Bond/Debenture

Yield

11.7500%

Price

₹ 993.31

ESAF SMALL FINANCE BANK LIMITED

Coupon

11.0000%

Maturity

Apr 2030

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

11.3500%

Price

₹ 1,00,980.12

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2031

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2472%

Price

₹ 1,00,953.69

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2027

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2467%

Price

₹ 1,00,953.69

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2030

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2463%

Price

₹ 1,00,953.69

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2028

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2451%

Price

₹ 1,00,953.69

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2029

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2450%

Price

₹ 1,00,953.69

ESAF SMALL FINANCE BANK LIMITED

Coupon

11.0000%

Maturity

Apr 2030

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

11.3500%

Price

₹ 1,00,980.12

AU SMALL FINANCE BANK LIMITED

Coupon

10.7500%

Maturity

Feb 2029

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

9.5000%

Price

₹ 1,06,916.50

YES BANK LIMITED

Coupon

9.0000%

Maturity

Mar 2026

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2

Yield

9.5000%

Price

₹ 9,98,232.11

YES BANK LIMITED

Coupon

9.1500%

Maturity

Jun 2025

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2

Yield

9.4000%

Price

₹ 10,72,981.00

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

Coupon

7.5700%

Maturity

Mar 2026

Rating

Ind-Ra  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.5536%

Price

₹ 1,00,871.07

REC LIMITED

Coupon

7.6000%

Maturity

Feb 2026

Rating

CRISIL  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.5500%

Price

₹ 1,01,315.23

RURAL ELECTRIFICATION CORPORATION LIMITED

Coupon

7.5600%

Maturity

Jun 2026

Rating

CRISIL  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.5383%

Price

₹ 1,06,300.00

RURAL ELECTRIFICATION CORPORATION LIMITED

Coupon

7.6900%

Maturity

Jan 2033

Rating

CRISIL  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.4500%

Price

₹ 1,03,302.28

POWER FINANCE CORPORATION LIMITED

Coupon

7.5500%

Maturity

Aug 2038

Rating

ICRA  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

7.4500%

Price

₹ 1,063.99

GOVERNMENT OF INDIA

Coupon

7.3400%

Maturity

Apr 2064

Rating

Sovereign

Type of Bond

Central Government Securities

Yield

7.2900%

Price

₹ 100.80

GOVERNMENT OF INDIA

Coupon

6.6700%

Maturity

Dec 2035

Rating

Sovereign

Type of Bond

Central Government Securities

Yield

7.2500%

Price

₹ 97.98

GOVERNMENT OF INDIA

Coupon

5.8500%

Maturity

Dec 2030

Rating

Sovereign

Type of Bond

Central Government Securities

Yield

7.2300%

Price

₹ 95.28

GOVERNMENT OF INDIA

Coupon

7.1600%

Maturity

Sep 2050

Rating

Sovereign

Type of Bond

Central Government Securities

Yield

7.2300%

Price

₹ 99.37

GOVERNMENT OF INDIA

Coupon

7.6200%

Maturity

Sep 2039

Rating

Sovereign

Type of Bond

Central Government Securities

Yield

7.2000%

Price

₹ 104.80

INDIAN RAILWAY FINANCE CORPORATION LIMITED

Coupon

8.1000%

Maturity

Feb 2027

Rating

CARE  AAA

Type of Bond

Tax-free Bond

Yield

5.1000%

Price

₹ 1,120.59

SATYA MICROCAPITAL LIMITED

Coupon

13.8500%

Maturity

Jul 2029

Rating

CRISIL  BBB+

Type of Bond

Subordinate Debt

Yield

14.7560%

Price

₹ 1,00,683.01

NEOGROWTH CREDIT PRIVATE LIMITED

Coupon

12.5500%

Maturity

Aug 2025

Rating

ICRA  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.0000%

Price

₹ 1,01,582.84

SPANDANA SPHOORTY FINANCIAL LIMITED

Coupon

10.7500%

Maturity

Mar 2025

Rating

Ind-Ra  A

Type of Bond

Secured - Regular Bond/Debenture

Yield

11.2981%

Price

₹ 99,823.29

SPANDANA SPHOORTY FINANCIAL LIMITED

Coupon

10.7500%

Maturity

Sep 2025

Rating

Ind-Ra  A

Type of Bond

Secured - Regular Bond/Debenture

Yield

11.2969%

Price

₹ 99,823.29

MAS FINANCIAL SERVICES LIMITED

Coupon

10.7500%

Maturity

Jul 2029

Rating

CARE  AA-

Type of Bond

Subordinate Debt

Yield

11.2902%

Price

₹ 1,00,000.00

Note: Pursuant to the provisions of Section 193 of Income Tax Act, 1961, as amended, with effect from, 1st April 2023, TDS will be deducted @ 10% on any interest payable on any security issued by a company (i.e. securities other than securities issued by the Central Government or a State Government). The listing of products above should not be considered an endorsement or recommendation to invest. Please use your own discretion before you transact. The listed products and their price or yield are subject to availability and market cutoff times.

Frequently Asked Questions

Is Bank Bonds a good investment?

Bank Bonds are generally considered safe investments as they are issued by regulated banks. Bank Bonds provide relatively higher income as compared to FDs. However, one needs to check various aspects before investing in Bank Bonds online such as the creditworthiness of the bank, the prevailing interest rates, and the investor's financial goals and risk tolerance.

What is the interest rate on Bank Bonds in India?

The interest rate on Bank Bonds in India can vary depending on various factors such as the issuer, market conditions, and the tenure of the bond. Generally, Bank Bonds in India offer higher interest rates than fixed deposits.

Can Bank Bonds be sold before maturity?

Yes, Bank Bonds can be sold before maturity.

Do Bank Bonds attract any penalties?

No, Bank Bonds don’t attract any penalties, unlike FDs in terms of premature withdrawal. You can sell Bank Bonds in the secondary market anytime.