There are three ways a retail investor buys corporate bonds in India. Each has different minimums, different costs, and different things that can go wrong. Here is what the process actually looks like.
What you need first
A demat account. SEBI requires listed debt securities to be held in dematerialised form, so a demat account with a depository participant is a prerequisite for buying listed bonds. If you already trade equities, you have one.
A PAN and completed KYC. Standard for any market transaction.
That is the full list. There is no separate bond licence or minimum net worth for buying on the secondary market.
The three routes
| Route | Minimum | Main advantage | Main catch |
|---|---|---|---|
| Stock exchange | One bond at face value | Widest choice of issuers and maturities | Thin liquidity; stale quoted prices |
| Online Bond Platform Provider | Often a few thousand rupees | Curated list, simple settlement | Platform margin built into the price |
| Public issue | One bond at par | Known price, no spread to cross | Narrow choice; allotment can be scaled back |
Route 1: the stock exchange
Listed bonds trade on the NSE and BSE debt segments. You place an order through your broker exactly as you would for a share, by ISIN, with a quantity and a price.
The catch is liquidity. Most listed corporate bonds trade rarely, and many go days or weeks without a single transaction. You may not find a seller in your quantity, and the price on screen may be stale. Always check recent trade data for the ISIN before deciding a quoted price is fair. The secondary bond market in India explains why liquidity is this thin.
Costs are brokerage or a flat fee, demat charges, and statutory levies. On a thin bond the bid-ask spread will cost you far more than the explicit fees.
Route 2: an Online Bond Platform Provider
Since 2022, SEBI has a registration framework for Online Bond Platform Providers (OBPPs). These are entities licensed to sell listed debt securities to retail investors online. Before the framework, bond-selling websites operated in a regulatory grey area, and the framework gave them a defined status and obligations.
An OBPP typically shows you a curated list of bonds with indicative yields, handles the settlement, and delivers the bonds to your demat account. The experience is closer to buying a fixed deposit online than to placing an exchange order.
Check the registration. The term "OBPP" and phrases like "SEBI regulated" get used loosely. A genuine OBPP is registered as a stockbroker in the debt segment and lists that registration. If a platform will not show you its registration number, treat that as the answer.
The platform's margin is usually built into the price rather than charged as a visible fee. Compare the yield you are offered against recent exchange trades in the same ISIN.
Route 3: a public issue
Companies periodically raise money through a public NCD issue. This is an offer open for a set window, at a fixed coupon, at par. You apply through your broker or bank, usually via the ASBA process, and receive an allotment.
It gives you a known price, no spread to cross, and a fresh full-tenure bond. Against that, you only get what is on offer in that window, allotment can be scaled back if the issue is oversubscribed, and your choice is limited to whichever companies happen to be issuing. Public issues also skew towards NBFCs and finance companies raising retail money, so the credit mix on offer is narrower than the secondary market.
After you buy: accrued interest
Buy on the secondary market between coupon dates and the amount debited from your account will be more than the quoted price. The difference is accrued interest, the portion of the next coupon that the seller earned by holding the bond before you. You pay it to them now and receive it back in full when the next coupon is paid to you. Nothing has gone wrong. This is how bond settlement works everywhere. The accrued interest calculator shows the split for a specific bond.
Which route for whom
- Small amounts, want simplicity: an OBPP, with the registration checked.
- Specific bond in mind, comfortable placing orders: the exchange directly.
- Want a fresh bond at par and do not mind a narrow choice: a public issue when one is open.
Whichever route, the analysis is the same. Look at the yield to maturity rather than the coupon, read the credit rating, and assume you are holding to maturity because selling early may not be an option.