Investors seeking higher returns than traditional bank deposits, while avoiding the risks associated with elevated equity valuations, are increasingly turning to bond platforms for fixed-income investments. Platforms such as Bondbazaar, Indiabonds, Bondsindia, GoldenPi, and others offer a variety of bonds, including those from Public Sector Units (PSUs), tax-free bonds, government bonds, Non-Banking Financial Companies (NBFCs), and microfinance instruments. These options allow investors to tailor their debt portfolios according to their risk appetite and cash flow requirements.
The removal of the indexation benefit for debt mutual funds and the restriction on debt funds from predicting returns has shifted investor preference towards direct bond investments due to their clearer return visibility. Bond platforms typically generate revenue through markups on bond prices, and in the case of primary market issuances, they earn commissions from the issuers. The returns on these bonds range from 7% to 20%, depending on their ratings and associated risks.
Suresh Darak, Founder of Bondbazaar, mentions that investors on their platform aim for returns higher than those from bank deposits, typically between 9% and 11%. Bonds rated AA to A fall within this desired return range. Distributors observe that investors are particularly interested in bonds that yield 200 to 400 basis points more than bank deposits, remaining comfortable with ratings up to A to manage risk.
Popular choices among investors include the AA-rated Shriram Finance bond, maturing in March 2028 with a 9.2% yield, a 9.65% Adani Enterprise bond maturing in September 2027 with a 9.55% yield, and a Sammaan Capital bond maturing in June 2026 offering up to 12.75%. In comparison, a three-year fixed deposit with the State Bank of India (SBI) yields 7%, providing investors an additional 200 to 500 basis points through bonds.
Investors have the flexibility to diversify their portfolios by selecting bonds based on tenure, return, rating, and interest frequency. Investment can begin with amounts as low as ₹10,000 up to ₹1 lakh, depending on the face value and availability of the bonds.
