Bonds and Non-Convertible Debentures (NCDs) are crucial instruments in the Indian capital market, serving as effective tools for raising debt capital. Bonds are fixed-income securities issued by governments, financial institutions, or corporations to fund projects or meet capital requirements. They typically offer regular interest payments (coupon) and return the principal amount upon maturity. In India, bonds are categorized as government bonds (G-Secs), corporate bonds, and infrastructure bonds. G-Secs, issued by the Reserve Bank of India (RBI) on behalf of the government, are considered risk-free, whereas corporate bonds carry a higher risk but offer better returns.

NCDs, a subset of corporate bonds, are debt instruments issued by companies to raise long-term funds without the option of conversion into equity. They typically offer higher interest rates than traditional fixed deposits, attracting retail and institutional investors. NCDs can be secured or unsecured and are rated by credit rating agencies, helping investors assess their risk profile.

Both bonds and NCDs play a pivotal role in diversifying investment portfolios and providing a steady income stream. The Indian government has also promoted initiatives like Bharat Bonds to enhance retail participation in the bond market. However, investors should carefully evaluate factors such as credit rating, interest rates, and liquidity before investing in these instruments, ensuring alignment with their financial goals and risk appetite