Learn how to buy and sell bonds in India with this step-by-step guide covering platforms, processes, and what happens when you hold bonds till maturity.
Keeping the list of bonds he chose to invest in one hand, Mr. Financewala opens his Jiraaf account. But the moment he lands on the platform, he realizes that while he now understands what to look for before investing in bonds and has even refined his bond list after factoring in taxation, he isn’t familiar with the actual process of buying a bond.
In this chapter, we walk you through the exact step-by-step process of how you can buy bonds on platforms like Jiraaf, as well as through government portals such as RBI Retail Direct. But before we get into the process, it is important to understand the roles of the primary and secondary markets in your bond investing journey.
The Role of Primary and Secondary Markets in Bond Investing
There are only two routes through which you can buy and sell bonds in India: the primary market and the secondary market.
The primary market is where bonds are issued for the first time. Governments and companies use this market to raise funds by issuing new bonds. For them, the primary market acts as a direct way to raise capital from the public. For investors like you, it offers a way to participate in a bond IPO.
On the other hand, bonds that are already issued are bought and sold in the secondary market. At this stage, the bonds are traded on exchanges such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This market provides you liquidity and flexibility to enter or exit bonds before their maturity.
With the role of primary and secondary markets clear, we will take a look at how you can buy bonds in India step by step.
Buying Bonds in India: Step-by-Step Process
Let’s walk through the process of how you can invest in bonds, with platforms like Jiraaf and other government portals like RBI Retail Direct.
Buying Bonds on Jiraaf
Step 1: Register on Jiraaf
Go to jiraaf.com or download the Jiraaf app from the Play Store or Apple App Store. Click on Login / Sign Up and enter your name, mobile number, and email address to create your account.
Step 2: Complete your KYC
Proceed with the KYC verification process. You will be required to submit the following details:
- PAN details
- Aadhaar details
- Bank account number with IFSC code
- Demat account details (DP ID + Client ID)
KYC verification may happen instantly in some cases, while in others, it can take up to 24 to 48 hours to complete.
Step 3: Browse Investment Opportunities
Once you log in, you land on the bond opportunities page, where all available bonds are listed. Each opportunity will have details including:
- Issuer name and credit rating
- Yield (YTM)
- Tenure
- Minimum investment amount
- Interest payout frequency
- Risk category
(Note: You can use Jiraaf’s Bond Analyzer Tool to research and compare bond options amongst issuers before investing.)
Step 4: Review the bond details
Before placing an order, click on the bond you are interested in and read through:
- The offer documents and risk disclosures
- The issuer’s financial background and credit assessment
- Security/collateral details
- Repayment schedule
(Note: Jiraaf also provides detailed bond research reports, allowing you to analyse each bond opportunity more thoroughly before investing.)
Step 5: Place your order
Once you have decided, click “Invest” and confirm your order details, including the number of units, the price per unit (which changes daily based on accrued interest, premiums, or discounts), and the total investment amount.
Once you place a bond order, Jiraaf assigns a dedicated Relationship Manager (RM) to assist with any queries and guide you through your bond investment journey.
Step 6: Make payment
After confirming your order, you will be redirected to a payment page. Jiraaf supports two payment methods:
- UPI
- Net Banking
Step 7: Receive Confirmation and Settlement
Once payment is successful:
- You receive an email confirmation from Jiraaf with order details (deal name, executed price, etc)
- Purchased bond units are credited to your Demat account typically by the next trading day (T+1). If the following day is a market holiday, the units will be credited on the next trading day when the market reopens.
- The bonds appear under the “Holdings” section of your Demat account with your broker.
- If you are not able to see bonds under your holdings, you can always request a bond holding statement from NSDL or CDSL.
Step 8: Monitor Your Investment
Log in to your Jiraaf dashboard at any time to track your active investments. Interest and principal repayments are made directly by the issuer to your linked bank account as per the repayment schedule of the bond.
You can also invest in government securities and other gilt-edged securities through government portals such as RBI Retail Direct.
Buying Bonds on RBI Retail Direct
RBI Retail Direct offers you the most direct route to invest in government securities and other gilt-edged securities. Here is how you can buy government bonds with RBI Direct:
Step 1: Visit the RBI Retail Direct Portal
Go to rbiretaildirect.org.in and click on “Open RBI Retail Direct Account”.
Step 2: Account registration
You will have to fill out a form with basic details, including full name (as per PAN), email address, mobile number linked to Aadhaar, PAN number, date of birth, and preferred login credentials.
Step 3: KYC completion
Complete your digital KYC process using Aadhaar-based verification. The system requires video identification to be completed within 3 days of registration. The next step in KYC completion requires you to upload the necessary documents, including your PAN card, a signature image, and your bank account details.
Step 4: Bank account validation
Link your savings bank account with the net banking/UPI facility for seamless transactions. This platform will validate your bank account details to ensure secure fund transfers.
Step 5: Account activation
Once KYC verification is successful, you’ll receive login credentials via email. The Retail Direct Gilt (RDG) account will let you participate in primary auctions and secondary market transactions.
Step 6: Investment process
You can check out available securities by reviewing auctions, placing non-competitive bids with a minimum investment of ₹1,00 or ₹10,000, and funding your bids through UPI or net banking. Allotted securities will be automatically credited to your RDG account upon successful allotment.
But before you begin the process, it helps to have all the required documents in place to ensure a smooth onboarding experience.
Documents Required to Buy Bonds in India
The documents required to invest in bonds depend on the platform you choose. While platforms like Jiraaf require a Demat account, government platforms like RBI Retail Direct hold securities in a separate account structure.
A. Identity & Tax
- PAN card (mandatory across all platforms)
- Aadhaar card (for KYC and video verification)
B. Bank Details
- Active savings bank account number as well as the IFSC code
- Net banking or UPI enabled on the account
C. Demat Account
- DP ID and Client ID (16-digit Demat account number)
(Note: A Demat account is required when investing through platforms like Jiraaf or stock exchanges. It is not required for RBI Retail Direct, where securities are held in an RDG account maintained with the RBI.)
D. Supporting Documents
- Signature & image (required for RBI Retail Direct)
- Valid email address
- Active mobile number linked to Aadhaar
Once you’re set up and have started investing, it’s equally important to understand how you can exit your investments when needed.
Selling Bonds in India: How It Works
Buying a bond does not mean you have to hold it until maturity. Most bonds can be sold in the secondary market if you choose to exit early.
Here is the step-by-step process:
- Ensure your bonds are held in demat form with a registered depository (NSDL or CDSL)
- Log into your broker or bond platform (OBPP)
- Select the bond you wish to sell
- Place a sell order at your desired price. You should note that the selling price may differ from the bond’s face value due to market factors.
- Once matched, the transaction is settled and funds are credited to your account
While selling before maturity offers flexibility, holding a bond until maturity provides clarity and certainty of payouts.
What Happens on the Maturity Date of a Bond
If you hold a bond until maturity, the process is structured and predictable.
During the tenure:
- Coupon payments are credited to your bank account
- Frequency depends on the bond terms (monthly, quarterly, semi-annual, or annual)
At maturity:
- The principal (face value) is credited to your bank account
- The bond is removed (extinguished) from your demat account
Based on bond structure (indenture):
- Some bonds may pay both interest and principal at maturity (cumulative structure)
- Zero-coupon bonds do not pay periodic interest; returns come at maturity
Conclusion
Mr. Financewala is now all set to invest in bonds. The process is mapped out, and all that remains is clicking on the “invest now” button.
But that is not the end. In the process of understanding bonds, Mr. Financewala has come to strongly believe that bonds can be used to achieve certain financial goals when used with intention. In the next chapter, we get into exactly that: the role of bonds in a portfolio and how you can put them to work smartly.
