ASSET-CLASSESM11

Bonds in India: Government & Corporate Securities

Deep dive into Indian bond market instruments: G-Secs, PSU bonds, corporate bonds, and how to invest.

Learning Goals

  • Understand the full range of Indian fixed-income products.
  • Calculate bond returns and duration risk.
  • Decide on appropriate allocation to bonds.

Core Concepts

Government Securities (G-Secs)
Beginner

Zero default risk, issued by the Government of India. 10-year bonds currently yield 6–7% depending on the market.

Floaters vs. Fixed Coupons
Beginner

Some bonds adjust interest if RBI raises rates; others are fixed. Floaters protect in rising-rate environments.

Ladder Strategy
Beginner

Instead of locking all money in 10-year bonds, buy bonds maturing in 2, 4, 6, 8, and 10 years for flexibility.

Indian Market Context

RBI Floating Rate Savings Bonds (FRSBs) offer 7.15% + variable rate. HDFC bonds yield 7.5–8% for premium safety. ICICI, AXIS also issue popular corporate bonds.

Hands-On Calculators

Future Value Calculator
Future Value₹3,10,585

Gain: ₹2,10,585

Real Return Calculator
Nominal Return12.00%
Inflation7.00%
Real Return5.00%

Behavioral Insight

🧠 RECENCY BIAS: When rates are falling, people lock into bonds; when rates are rising, they regret the decision.

From History

Bonds in India: Government & Corporate Securities

Those who invested in 10-year bonds at 6% in 2015 made excellent returns, while those who waited for higher rates in 2020 made less.

Take the Quiz

Module Quiz
If you buy a ₹10,000 G-Sec at 6% yield, your semi-annual coupon is:
A 10-year bond is riskier than a 2-year bond if interest rates are expected to fall.
What is a bond ladder?