How to Invest in a Bond IPO in India?

A Bond IPO (also known as a public issue of bonds) is your chance to invest directly in government or corporate bonds at the original offer price—regulated by SEBI and available through digital platforms like Bondbazaar.

Investing in bonds through a public issue is one of the easiest ways to earn steady income. A bond IPO—also known as an IPO public issue—is when a company or the government offers bonds directly to the public for the first time. This gives investors the opportunity to buy bonds at the original offer price, before they are available in the secondary market.

A bond issue like this can be a smart way to lock in fixed returns over time. If you're new to fixed-income investments or simply want to diversify with safer options, understanding how an IPO public issue works is a great place to start. This guide breaks it down in a simple, step-by-step way.

What is a Bond?

A bond is a fixed-income financial instrument that represents a loan made by an investor to a borrower, typically a corporation or government. The issuer promises to pay interest at regular intervals and return the principal amount on a specified maturity date.

Think of it as a long-term agreement—you lend your money, and in exchange, you get steady returns over time. It’s a popular choice for those who want predictable earnings without the ups and downs of the stock market.

Let’s say you buy a bond worth ₹10,000 with 10% interest for 5 years.

• Every year, you’ll get ₹1,000 as interest.
• After 5 years, you’ll get your ₹10,000 back.

That’s how bonds give you fixed and regular income.

What is a Bond IPO?

A bond IPO is when a company or government offers its bonds to the public for the first time. Here’s the public issue meaning: It simply means anyone from the public can apply and buy the bonds during a set period.

This is not the same as a share IPO, where you become a part-owner of the company. In a bond IPO, you become a lender to the company or government, and they agree to pay you interest regularly until maturity.

How Bond IPOs Work in India?

Bond IPOs follow a structured and regulated process before they are made available to investors. This ensures transparency, standardisation, and investor protection. Every public issue must comply with SEBI regulations, and issuers must disclose all necessary information to help investors make informed decisions.

Here is how the process works in India:

Step 1: Issuer Prepares the Offer Documents

The company or government body prepares a draft offer document that includes details such as interest rates, credit rating, financial statements, and the use of funds.

Step 2: Filing With the Stock Exchanges

The issuer files the draft documents and listing application with stock exchanges as per SEBI regulations

Step 3: Appointment of Lead Managers

Registered merchant bankers act as lead managers and conduct due diligence to ensure the accuracy of disclosures.

Step 4: Opening of the Subscription Window

The bond IPO opens for a specific period. Retail investors, HNIs, and institutions can apply through their demat accounts.

Step 5: Allotment and Listing

Once the offer closes, allotment is processed. The bonds are then credited to the investor’s demat account and later listed on NSE/BSE for trading.

Step 6: Interest Payout and Maturity

Investors receive interest (coupon) at regular intervals until maturity, after which the principal amount is repaid as per the terms of the issue.

Benefits of Investing in a Bond IPO

Here’s why many smart investors invest in a bond issue through a public offering:

1. Start with as low as ₹10,000 – You don’t need to start with lakhs.

2. Higher returns than FDs – Companies often offer more interest to individual investors than to big institutions.

3. Regulated by SEBI – The bond process is safe and follows all government rules.

4. Transparent pricing – Everyone pays the same price. There’s no bidding like in share IPOs.

5. Listed on NSE/BSE – You can track performance and sell bonds later if needed.
6. Easy to exit – Most public issues have better liquidity (easier to sell) than other bonds.

Eligibility to Invest in Bond IPOs

Bond IPOs offer wide access to investors across categories. Anyone with a valid demat account and KYC-compliant documents can participate.

Here are the main eligible investor categories:

• Retail Individual Investors (RIIs) - Individuals applying within the retail limit specified in the offer document.
• High Net Worth Individuals (HNIs) - Applicants investing above the retail limit as per the allotment rules.
• Qualified Institutional Buyers (QIBs) - Institutions such as banks, mutual funds, pension funds, and insurance companies.
• Non-Resident Indians (NRIs) - Allowed to invest subject to RBI regulations and specific conditions mentioned in the bond offer document.
• HUFs and Trusts - Eligible based on KYC compliance and category allocation rules.

These broad participation rules make bond IPOs accessible to investors with varied profiles and investment goals.

How to Apply for a Bond IPO on Bondbazaar?

At Bondbazaar, we’ve made investing in a bond IPO (also called a public issue) smooth, transparent, and fully digital. Here’s how you can apply online:

Step 1:
Log in to your Bondbazaar account and head over to the Public Issue section.

Step 2:
Browse the ongoing bond IPOs. For each public issue, we provide all the key details—including interest rates, maturity period, and issuer profile—along with downloadable offer documents for deeper insights.

Step 3:
Select your investor type (such as Individual or HUF) and your category (Retail or HNI).

Step 4:
Choose the bond series that fits your investment goals. Some bonds offer interest payouts monthly, while others do so annually. Enter your investment amount (starting from just ₹10,000).

Step 5:
Fill in a few basic details—PAN, demat account, bank information, and address.

Step 6:
Preview your application to ensure everything looks right, then hit submit.

Step 7:
Make your payment through:

• UPI (for investments up to ₹5 lakh
• ASBA (Application Supported by Blocked Amount—for ₹5 lakh and above)

Once the application is successful and allotment is confirmed, the bonds will be credited directly to your demat account. From there, you’ll start receiving interest as per the schedule mentioned in the bond issue.

Documents Required for Bond IPO in India

To apply for a bond IPO, you will need:

• PAN card
• Demat account details
• Bank account details
• Address proof

Who Can Issue a Bond IPO?

• Companies: To raise money for projects, expansion, or to repay loans.
• Governments: To fund roads, railways, or other public works. These are called government bonds and are considered very safe.

Missed the IPO? You Can Still Buy!

Even if you miss applying during the IPO window (which usually lasts 3–5 days), you can still buy bonds in the secondary market through Bondbazaar.

We provide you:

• Over 10,000 bonds, including corporate and government bonds.
• A platform to buy or sell bonds anytime.
• Zero charges—no fees for opening or maintaining your account.

Risks to Keep in Mind

While bond IPOs are safer than shares, you should know the risks:

• Interest Rate Risk: If market interest rates go up, your bond’s value may go down.
• Credit Risk: If the company does badly, it may struggle to pay interest.
• Liquidity Risk: Not all bonds are easy to sell. Government bonds and well-rated corporate bonds are usually more liquid.
• Inflation Risk: Fixed income might lose value if inflation is high.

Tax Rules for Investors in Bond IPOs

Bond IPOs have specific tax rules depending on how long you hold the bonds and the type of income you earn. Investors should understand these tax treatments before applying.

Interest Income

Interest earned from bonds is added to your total taxable income and taxed as per your applicable slab rate.

Short-Term Capital Gains (STCG)

If you sell the bond within 12 months in the secondary market, gains are classified as short-term. The tax rate depends on the applicable rules at the time of sale.

Long-Term Capital Gains (LTCG)

If you sell the bond after holding it for more than 12 months, profits fall under long-term capital gains and are taxed as per current regulations.

No Indexation Benefit

Listed bonds generally do not get indexation benefits. Tax treatment depends on whether the bond is listed or unlisted and on the applicable rules at the time of sale.

Key Things to Check Before Investing

Before applying for a bond IPO, it is important to carefully evaluate the offering. Here are key areas to review:

• Credit Rating - Understand the issuer’s creditworthiness and repayment capability.

• Coupon Rate and Payout Frequency - Check whether payouts are monthly, quarterly, or annual.

• Tenure of the Bond - Match the maturity period with your investment horizon.

• Liquidity After Listing - Listed bonds can be sold, but liquidity depends on market demand.

• Issuer Background - Review financial stability, the purpose of fundraising, and past repayment history.

• Tax Impact - Consider how interest and capital gains will be taxed.

• Minimum Application Amount - Verify the required minimum investment before applying.

Evaluating these points ensures investors choose bonds that align with their financial plan and risk appetite.

How Are Bond IPOs Different from Share IPOs?

Conclusion

Bond IPOs are a smart and safe way to invest your money for fixed returns. Whether you want to earn a steady income, diversify your portfolio, or simply avoid the ups and downs of the stock market, bond IPOs are a great choice. They are simple to apply for, need minimum investment, and are regulated by SEBI. With Bondbazaar, investing in government bonds or corporate bonds is just a few clicks away. Start today, and build a secure financial future with confidence. After all, slow and steady can truly win the race.

FAQs

1. How can I invest in a bond IPO in India?

You can invest in a bond IPO through Bondbazaar, a SEBI-regulated online platform, by using your demat account. Select the ongoing public issue, enter your details, choose the series, and complete payment via UPI or ASBA based on issue rules and investor category

2. What is the process for applying to a bond IPO online?

Log in to Bondbazaar, visit the public issue section, review details, choose the bond series, enter the investment amount, complete KYC information, and make a payment through UPI or ASBA to submit your application.

3. What documents do I need to invest in a bond IPO?

You need a PAN card, demat account details, bank account information, and valid address proof. These ensure seamless KYC verification and allotment.

4. Are bond IPOs safe for beginners?

Bond IPOs are regulated by SEBI and offer fixed coupon payments. However, investors should review credit risk, liquidity, and issuer details before investing, especially if they are new to fixed-income products.

5. Do bonds have IPOs in India?

Yes, companies and government-backed entities issue bonds to the public through public bond issues. These are accessible to all categories of investors with a demat account.

6. Which bonds currently offer an interest rate of around 7.5 per cent?

Interest rates vary by issuer, credit profile, and tenure. Investors should check active public issues and listed bonds on Bondbazaar for the latest rates.

7. How is the interest rate decided in a Bond IPO?

Issuers determine the coupon rate based on market conditions, their credit rating, and investor demand. The rate is clearly stated in the offer document.

8. Are Bond IPOs safe?

Bond IPOs follow SEBI regulations and offer fixed payouts, but safety depends on the issuer’s credit profile. Investors should evaluate credit ratings and financial disclosures before applying.

9. What is the minimum investment amount in a Bond IPO?

Most bond IPOs allow investments as low as ₹10,000, depending on the terms outlined in the prospectus.

10. Can I sell my bonds after the IPO?

Yes, once the bonds are listed on exchanges, you can sell them through your demat account. Liquidity depends on market demand and trading activity.

11. Are Bond IPO returns fixed?

 

Bond IPOs offer fixed coupon payments as specified in the offer document. These payments continue until maturity unless stated otherwise by the issuer.