Invest in corporate bonds
Corporate bonds let you lend directly to a company and earn a fixed coupon, typically at a higher yield than a bank fixed deposit of the same tenor. Every issue below shows its credit rating, coupon, payout frequency and yield to maturity before you commit to anything.
What is a corporate bond?
A corporate bond is a debt instrument issued by a company to raise money from investors. You lend the company a fixed amount for a fixed term, the company pays you interest at a stated coupon rate on a fixed schedule, and it repays the face value at maturity. Unlike equity, you are a lender rather than an owner: your return does not depend on the company's profits, only on its ability and willingness to pay what it owes.
In India these are issued as listed non-convertible debentures (NCDs) and other debt securities, held in your demat account exactly like shares. Because they are listed, they carry an ISIN, are rated by a SEBI-registered credit rating agency, and their terms are a matter of public record in the issue documents.
Why corporate bonds usually yield more than a fixed deposit
A bank deposit is a claim on a bank, and deposits up to ₹5 lakh are insured by the DICGC. A corporate bond is a claim on a company, with no such insurance. That difference in credit risk is the main reason a corporate bond of the same tenor generally offers a higher yield, and it is the difference you are being paid to take.
The size of that premium tracks the credit rating. A AAA-rated issue from a large, established borrower pays only modestly more than a deposit; a lower-rated issue pays considerably more, because the chance of the issuer missing a payment is genuinely higher. A yield that looks far better than everything around it is describing a risk, not offering a bargain.
How to read a credit rating
Ratings run from AAA (highest safety) down through AA, A, BBB and below, assigned by agencies such as CRISIL, ICRA, CARE and India Ratings. Anything rated BBB- or above is considered investment grade. A '+' or '-' refines the position within a band, and the rating agency's rationale document explains what drove it.
A rating is an opinion on the likelihood of timely payment, not a guarantee and not a recommendation. Ratings are reviewed and can be downgraded, which usually moves the bond's market price against you well before any payment is actually missed. Every bond listed here shows its rating and the agency that assigned it.
What you should check before investing
Look at the yield to maturity rather than the coupon: the coupon is a percentage of face value, while YTM accounts for the price you actually pay and is what you can compare across issues. Check the payout frequency against when you actually need the income, and the maturity date against how long you can leave the money invested.
Then look at what happens if you need to exit early. Corporate bonds trade on the exchange, but liquidity in individual issues can be thin, and selling before maturity means accepting whatever price the market offers on that day. Bonds marked as buyback-eligible on FixedFlow carry an assured buyback, an assurance rather than a guarantee; the rest do not.
How corporate bonds are taxed
Interest from a corporate bond is added to your total income and taxed at your slab rate, in the year you receive it. If you sell a listed bond on the exchange before maturity, any gain is a capital gain, treated as long-term if you held it for more than 12 months.
Tax treatment depends on your own circumstances and on rules that change. This is general information, not tax advice — confirm your position with a qualified adviser before you rely on it.