IndiaBonds: Online Bond Platform – Good or bad? An Insightful Review

India’s bond market is undergoing a quiet revolution. With SEBI reducing the minimum investment limits and formalising Online Bond Platform Providers (OBPPs), retail investors finally have a seat at a table that was once reserved for institutions and ultra-HNI investors.

But with this newfound access, an important question emerges: Are platforms like IndiaBonds truly simplifying fixed-income investing—or merely making a complex product look convenient?

In this review, we not only break down IndiaBonds as a platform but also decode the broader world of bonds—how they work, when they shine, the risks they carry, and the kind of investor who should (and shouldn’t) be exploring them.

Table of Contents:

1. Understanding the Bond Market
2. What Is a Bond?
3. Government Bonds
4. Private / Corporate Bonds
5. Importance of Credit Ratings
6. Top Credit Rating Agencies in India
7. Types of Bonds Based on Collateral
8. IndiaBonds: Platform Overview
9. Key Features of IndiaBonds
10. Product Offerings on IndiaBonds
11. Interest Pay-out Options
12. Minimum Ticket Size
13. Platform Features of IndiaBonds
14. Who Should Consider Investing Through IndiaBonds?
15. Critical Questions to Ask Before Investing
16. Tax Implications
17. Bonds vs. Equity: A More Realistic Look at Risk
18. The Franklin Templeton Shock: When “Safe” Debt Strategies Suddenly Froze
19. What Makes Credit Risk So Tricky?
20. Key Takeaways
21. Prefer More Transparent Options? Here’s the Trade-Off
22. Conclusion: Why a CFP Helps You Avoid Costly Mistakes

1. Understanding the Bond Market

Have you ever lent money to someone and expected it back with interest?
That—at its simplest—is exactly what a bond represents.

Governments, companies, and financial institutions borrow money from the public and promise to repay it with a fixed interest. Simple enough, right?

But then the real questions arise:

• Why is the bond market called the backbone of the economy?
• If it’s such a crucial financial engine, why were retail investors missing from it for decades?
• And now that platforms like IndiaBonds have made access easier, how do you separate convenience from genuine investor benefit?

The truth is that retail investors stayed away due to high ticket sizes, low awareness, and complex buying processes.

OBPPs—including IndiaBonds—attempt to fix exactly this.

2. What Is a Bond?

A bond is essentially a formal IOU. You lend money to an issuer, and in return, you receive periodic interest and principal repayment.

Sounds straightforward—until you start asking the right questions:

• What if the issuer fails to repay?
• Do interest rate movements affect your bond value?
• Can you exit before maturity—and at what cost?

These nuances make it critical to evaluate a bond not just by its returns, but by its structure, liquidity, and the issuer’s creditworthiness.

3. Government Bonds

Government bonds are widely viewed as the gold standard of debt investing in India.

Backed by sovereign guarantee, they carry minimal default risk.

But does “safe” always mean “suitable”?

• Can G-Secs beat inflation?
• Are they liquid enough when you need to exit?
• Is the process of investing—RBI Retail Direct, exchanges, or platforms—truly seamless?
• Are there hidden charges or liquidity limitations you should be aware of?

While G-Secs are a strong fit for conservative investors, they may fall short for those seeking higher yields.

Minimum Investment: ₹1,000 (in multiples)

Where to Invest: RBI Retail Direct

4. Private / Corporate Bonds

Corporate bonds remained inaccessible to retail investors for years due to high entry barriers.

SEBI’s move to reduce minimum investment to ₹10,000 changed that landscape dramatically.

But accessibility doesn’t equal suitability.

Important questions still remain:

• Should you only stick to AAA-rated bonds?
• Do higher yields always mean higher risk?
• How do you verify a company’s debt servicing track record?
• Is the liquidity genuine, or only on paper?

Corporate bonds offer attractive yields, but they demand sharper due diligence—something platforms like IndiaBonds claim to simplify, but ultimately, the responsibility rests on the investor.

5. Importance of Credit Ratings

Would you lend money without knowing the borrower’s financial stability?

That’s exactly what credit ratings help you gauge.

But even ratings come with limitations:

• Do rating agencies sometimes miss warning signs?
• Can highly rated bonds still default?
• Does a downgrade always mean danger—or sometimes an opportunity?
• Should a single rating be trusted without cross-checking?

Ratings are useful—but never the full story.

They should be paired with issuer analysis, cash flow strength, and historical repayment behaviour.

6. Top Credit Rating Agencies in India

• CRISIL
• ICRA
• CARE Ratings
• India Ratings & Research
• SMERA
• Brickwork Ratings

But again—more questions arise:

• Do all agencies interpret risk the same way?
• How frequently are ratings updated?
• Is there potential bias since issuers pay rating agencies?

Cross-verifying ratings is a smart practice, especially in uncertain markets.

Simplified Rating Scale:

Safety Level	CRISIL	CARE	ICRA
Highest Safety	CRISIL AAA	CARE AAA	ICRA AAA
High Safety	CRISIL AA	CARE AA	ICRA AA
Low Risk	CRISIL A	CARE A	ICRA A
Moderate Safety	CRISIL BBB	CARE BBB	ICRA BBB
Moderate Risk	CRISIL BB	CARE BB	ICRA BB
High Risk	CRISIL B	CARE B	ICRA B
Very High Risk	CRISIL C	CARE C	ICRA C
Default	CRISIL D	CARE D	ICRA D

7. Types of Bonds Based on Collateral

Is all debt created equal? Not quite.

Bonds vary widely in safety depending on what backs them. So, what should you look for as a retail investor?

• Senior Secured Bonds: Backed by collateral—your safest bet.
• Senior Unsecured Bonds: No collateral—more risk.
• Subordinated Bonds: Repaid only after senior bonds—higher risk.
• Perpetual Bonds: No maturity—most risky.

If the issuer goes bankrupt:

• Who gets paid first?
• Can you recover anything from a defaulted bond?
• Does the collateral truly offer protection in practical scenarios?

The type of bond matters significantly when it comes to capital protection.

Prioritising secured over unsecured debt is often a wise move for conservative investors.

Understanding the bond structure can significantly influence your capital protection—something many platforms, including IndiaBonds, encourage investors to analyse before making a choice.

8. IndiaBonds: Platform Overview

Launched in 2021, IndiaBonds is a SEBI-registered stockbroker in the debt segment and an approved Online Bond Platform Provider (OBPP).

Its stated purpose is simple: to make fixed-income investing more accessible, transparent, and structured for retail investors.

But what does this really mean for someone investing their hard-earned money?

• Does regulatory oversight guarantee complete safety?
• Does the platform highlight the real risks behind high-yield bonds—or just the returns?
• Are the available filters enough to help you pick the right bonds?
• And can platform convenience sometimes mask the complexities of credit risk?

While SEBI’s OBPP framework certainly reduces scam-related risks, it does not protect you from issuer default.

This makes independent due diligence, beyond platform tools, non-negotiable.

Minimum Investment on IndiaBonds

One of the platform’s strengths is its low entry barrier:

• Government Securities (G-Secs / T-Bills / SDLs): start at just ₹100
• Corporate Bonds: generally, begin at ₹10,000
• SGBs and select issues: sometimes available in multiples as low as 1 gram of gold

But even here, important questions remain:

Is the minimum investment truly “small” relative to your financial situation?

Should such allocations come from your emergency fund? (Hint: No.)

And more importantly—does the ease of investing make you overlook the risk of default or liquidity challenges?

9. Key Features of IndiaBonds

IndiaBonds offers a wide set of features designed to simplify bond discovery and execution:

• Fully compliant with SEBI OBPP guidelines
• Bond yields ranging from 6% to 12%
• Advanced screening filters (yield, tenure, pay out frequency, credit rating)
• Zero transaction fees or brokerage charges
• Tenures ranging from 6 months to 5+ years
• Access to high-grade, medium-grade, and high-yield instruments

These features make the platform beginner-friendly—but also raise an important question:

Does ease of use reduce the need for deeper analysis?

Unfortunately, no. Bond risk remains unchanged, even if the platform interface looks simple.

10. Product Offerings on IndiaBonds

IndiaBonds offers a wide range of fixed-income instruments, giving investors multiple ways to build a fixed-income portfolio.

i. Bond Trading

IndiaBonds lists a wide range of bonds—senior secured, unsecured, corporate bonds, NBFC issues, and market-linked options.

Investors can filter by YTM, tenure, credit rating, and pay-out frequency, making shortlisting easier.

However, the final decision still depends on reviewing the issuer’s financial strength and repayment capacity.

ii. Public Issue (NCDs & G-Secs)

Shows live, upcoming, and recently closed public issues.

Useful for investors who prefer applying directly in new NCDs or government-backed issuances instead of buying on the secondary market.

iii. G-Secs / SDLs / T-Bills

The platform provides access to sovereign securities like G-Secs, SDLs, and Treasury Bills.

These carry negligible credit risk, making them suitable for conservative or long-term stability-focused investors.

iv. Sovereign Gold Bonds (SGBs)

Investors can buy and redeem SGBs through the platform.
They offer:

• 2.5% annual interest
• No storage hassle
• Tax-free capital gains (if held till maturity)

A cleaner alternative for long-term gold allocation.

v. Capital Gains 54EC Bonds

A dedicated section for REC, PFC, NHAI, and IRFC 54EC bonds—commonly used to save LTCG tax after selling property.

IndiaBonds clearly displays issuance terms and lock-in periods to help with compliance.

vi. Bond Case (Curated Bond Baskets)

IndiaBonds’ signature feature—pre-built portfolios grouped by risk appetite, maturity profile, or pay-out preference.
They simplify selection for beginners, though investors should still review every underlying bond instead of relying solely on the curated label.

vii. Fixed Deposits

The platform also lists FDs from SFBs and NBFCs like Utkarsh, Suryoday, Shriram, Bajaj Finance, etc.

Handy for users who want traditional, fixed-return instruments alongside market-linked bonds.

viii. Corporate Bonds Catalogue

A broad inventory of corporate and NBFC bonds with varying tenures and pay-out structures.

Higher yields come with credit, liquidity, and downgrade risk, so suitability depends on the investor’s risk tolerance.

11. Interest Pay-out Options

Most bonds on IndiaBonds come with multiple pay-out choices — monthly, quarterly, and semi-annual interest.

This flexibility is useful for investors looking for predictable cash flow. But is a frequent pay-out always the smartest choice?

Here’s where investors often underestimate the impact:

• Receiving monthly or quarterly interest interrupts compounding. Over time, could this reduce long-term wealth growth?
• Will you actually reinvest these pay-outs consistently, or will they sit idle in a low-interest account?
• If cumulative options aren’t available, is the post-tax return still attractive?
• And most importantly — what happens if the issuer faces cash-flow stress and delays interest payments?

Regular income sounds appealing, but the real question is: Does it align with your financial goals or just feel convenient?

12. Minimum Ticket Size

One of IndiaBonds’ biggest strengths is accessibility.

Retail investors can start with:

• G-Secs at just ₹100
• Corporate bonds typically from ₹10,000

This dramatically lowers the barrier to entering the bond market.

But does a low ticket size automatically make a product suitable?

Before investing, consider:

• Is ₹10,000 an amount you’re genuinely comfortable risking on a single issuer?
• If a bond is high-yield, are you prepared for the possibility of default?
• Should essential funds like emergency savings ever be allocated to corporate bonds?
• Are you diversifying across issuers, or concentrating too much in one company?

Low minimum amounts make participation easy — but disciplined allocation still matters more than affordability.

13. Platform Features of IndiaBonds

IndiaBonds puts significant effort into creating a seamless user experience, and it shows.

✔ Smooth Web & Mobile Interface

Navigation is intuitive, filters are well-designed, and bond details are clearly laid out.

But does a great interface make a bond safer? Not necessarily.

A clean UI can sometimes create a sense of comfort that masks the underlying complexity of credit risk.

✔ Direct Access to Corporate Bonds

Earlier, retail investors relied heavily on intermediaries or private distributors.

IndiaBonds changes that by offering transparent access to multiple bond categories.

Yet, investors should ask:

• Are you analysing the issuer’s financials beyond the platform’s summary?
• Are you relying solely on YTM without understanding the risks behind high returns?
• Does the platform highlight liquidity limitations as clearly as the yields?

Convenience is a strength — but it should complement informed decision-making, not replace it.

14. Who Should Consider Investing Through IndiaBonds?

High-yield bonds are not for everyone. They are best suited for investors who match the following profile:

• High-Risk Tolerance

You must be willing to accept the possibility of losing part—or even all—of your capital if the issuer defaults.

These bonds compensate for higher risk with higher yields.

• Longer Investment Horizon

A long-term outlook helps you ride out volatility and economic fluctuations.

Staying invested until maturity improves the chances of recovering your principal (assuming no defaults).

• Aim for Higher Income/Returns

These bonds offer substantially higher yields than government or investment-grade bonds, making them attractive to investors seeking enhanced income.

• Need for Portfolio Diversification

High-yield bonds generally show low correlation with traditional fixed-income products.

When allocated strategically, they can diversify a portfolio and potentially reduce overall volatility.

• Informed & Active Investors

1. Ideal for those willing to:
2. Analyse the issuer’s financial strength
3. Understand governance and creditworthiness
4. Monitor market conditions
5. Or those who work with a qualified financial professional.

15. Critical Questions to Ask Before Investing

Before allocating money, consider:

• Can I withstand delays or defaults without jeopardising essential goals?
• If I need to exit early, will I find a buyer — or face a steep discount?
• Am I basing my decision on yield alone?
• Is the platform reliable for the long term, and what happens to my holdings if ownership changes?
• Most importantly: Does this investment fit into my overall financial plan?

Bond investing works best when it supports long-term objectives — not when it’s driven by yield temptation

16. Tax Implications

Understanding taxation is essential because taxes can significantly change net returns.

Listed Bonds

• Held ≤ 12 months → STCG taxed as per your income slab
• Held > 12 months → LTCG taxed at 12.5% (without indexation)

Unlisted Bonds

• Held ≤ 24 months → STCG as per slab
• Held > 24 months → LTCG 12.5% (no indexation)

Interest Income

• TDS @ 10% applies to both listed and unlisted bonds
• Interest is fully taxable as per slab, increasing the effective tax burden for higher-income investors

Fixed Deposits

• TDS @ 10% if interest exceeds ₹40,000 (₹50,000 for senior citizens)
• Can submit Form 15G/15H if eligible to avoid TDS

Knowing tax rules ensures you compare returns correctly — because pre-tax yields don’t always reflect true profitability.

17. Bonds vs. Equity: A More Realistic Look at Risk

When people think of risk, they usually picture equity markets.

After all, equity mutual funds can swing wildly — sometimes dropping 40–50% during major corrections.

But here’s the part many investors overlook: equity doesn’t default.

Even during the worst crashes, equity mutual funds don’t go to zero.
You only lose money if you sell at the wrong time, not because the underlying companies stop existing.

Historically, markets have always recovered, rewarding patient investors who stay invested through volatility.

Now, let’s compare that to bonds — especially the kind commonly sold on platforms like IndiaBonds or Bondbazaar.

What happens when a bond issuer can’t pay?

That’s not market volatility.

That’s default, and it can result in permanent capital loss.

And we’ve seen it repeatedly:

• DHFL (2019): Default on ₹1,500+ crore worth of bonds
• IL&FS (2018): A ₹91,000 crore collapse that sent shockwaves across the system
• YES Bank AT1 Bonds: Retail investors lost 100% after a complete write-off

So, are bonds “safer” than equity?

Not always.

Even senior secured bonds carry real credit risk.

What if the collateral value drops?

What if recovery takes five years?

What if you recover only 20–30% of your principal — or nothing at all?

Meanwhile, equity mutual funds come with benefits like diversification, liquidity, transparency, and professional fund management.

Over longer periods, the risk-adjusted returns of large-cap, hybrid, or multi-asset funds can be surprisingly resilient.

The real bottom line

Bonds aren’t automatically safer — they’re just risky in a different way.

So instead of asking:
“Which one is safer: bonds or equity?”

Ask yourself:

• “Can I emotionally handle volatility in equity?”
• “Am I comfortable with the possibility of default in bonds?”
• “Is my portfolio built to balance both growth and safety?”

There’s no universal answer.

The smartest investors match their choices to their temperament, goals, and time horizon, not to assumptions about which product is “safer.”

18. The Franklin Templeton Shock: When “Safe” Debt Strategies Suddenly Froze

Let’s rewind to April 2020.

Franklin Templeton — one of India’s most respected fund houses — abruptly shut down six debt mutual funds, freezing over ₹25,000 crore of investor money overnight.

But here’s the part most investors still find shocking:

These funds weren’t struggling before the shutdown.

In fact, they were excellent performers.

• They consistently beat fixed deposits
• They delivered steady returns year after year
• They were widely recommended by distributors and advisors
• Many investors viewed them as the “perfect” blend of safety and superior yield

So what went wrong?

The pandemic triggered mass redemptions, the bond market turned illiquid, and the lower-rated bonds inside these portfolios had no buyers.

The funds weren’t “underperforming” — they were simply unable to generate liquidity, and that alone was enough to freeze investor money for months.

Investors didn’t face mark-to-market losses.

They faced something far worse:

being locked out of their own money.

Eventually, most investors recovered their principal as the underlying bonds matured.

But the real lesson was hard to ignore:

“A strong track record does not guarantee structural safety.”

Even a reputed AMC — with:

• SEBI regulation
• daily NAV transparency
• professional credit analysis
• documented risk frameworks

— failed to prevent a liquidity crisis.

Now consider the contrast with unlisted bonds or high-yield instruments available on platforms like IndiaBonds:

• No daily NAV
• No secondary market liquidity
• No historical stress-test data
• Limited regulatory oversight
• No guaranteed exit
• Far smaller issuers with weaker balance sheets

So the real questions become:

• Do you truly know what stands behind that “9.5% guaranteed” coupon?
• What happens if the issuer faces the same liquidity freeze Franklin did?
• Who steps in to help retail investors then?

Franklin’s episode wasn’t a fraud.

It was a wake-up call — a reminder that even strong performers can fail under stress, and that past returns do not shield you from structural weaknesses.

Unlisted, high-yield bonds come with even thinner safety nets.

19. What Makes Credit Risk So Tricky?

Credit risk is not like equity volatility.

It’s like an earthquake — quiet until it suddenly isn’t.

Everything looks normal, returns flow smoothly, and the issuer appears solid.

Then one default triggers another. Liquidity dries up. Ratings fall.

And before you realize it, recovery becomes complicated, lengthy, or impossible.

That’s why smart investors never treat high-yield bonds as “FD alternatives.”

They may look similar — fixed returns, predictable pay-outs — but underneath, the structure is very different.

They’re more like FD lookalikes with hidden cracks.

20. Key Takeaways

Here’s what every investor should keep in mind:

• High-yield bonds offer attractive returns, but the risk of default is real and significant.
• Evaluating the issuer’s fundamentals, business model, and cash flows is crucial — not optional.
• Always consider interest-rate trends, credit cycles, and broader economic conditions before investing.
• Ensure the investment aligns with your risk capacity, time horizon, and financial priorities.
• Remember that bonds — especially privately placed ones — are far less liquid. Exiting early may be difficult or expensive.
• Strong branding or flashy marketing does not eliminate the underlying credit risk.
• Diversification and allocation discipline matter more than chasing a high coupon.

High-yield bonds are a tool — but only for the right investor, in the right proportion, with the right expectations.

21. Prefer More Transparent Options? Here’s the Trade-Off

Compared with Bank FDs or Government Securities

• Government securities, T-bills, and high-quality FDs offer far lower credit risk.
• They’re more liquid and backed by stronger guarantees.
• But they also offer lower returns.

High-yield corporate bonds sit in between — offering higher returns but demanding higher tolerance for risk.

Compared with Debt or Liquid Mutual Funds

• Debt funds spread risk across many issuers.
• They offer liquidity, daily NAVs, and SEBI regulation.
• But they come with management fees and interest-rate sensitivity.

Direct high-yield bond investing gives fixed pay-outs — only if the issuer remains healthy — but exposes you to issuer concentration risk.

22. Conclusion: Why a CFP Helps You Avoid Costly Mistakes

High-yield bonds can enhance your income, but they also carry credit, liquidity, and event risks that many investors underestimate.

If your goal is capital protection, safer alternatives like G-Secs, top-quality corporate bonds, or conservative debt funds may be better fits.

A Certified Financial Planner (CFP) can help you:

• Build a balanced, goal-aligned investment portfolio
• Evaluate whether high-yield bonds suit your risk profile
• Analyse issuer credit strength and liquidity
• Avoid concentration and credit traps
• Choose the right mix of equity, debt, and safer instruments

Professional guidance ensures you invest not just for returns, but for long-term stability and financial clarity.