Upstox Securities Pvt Ltd received approval from the Securities and Exchange Board of India (SEBI) in late October 2026 to operate as an Online Bond Platform Provider (OBPP) and offer corporate bonds in India directly to investors. The Mumbai based brokerage will offer listed corporate bonds, government securities and Sovereign Gold Bonds starting at ₹1,000. The licence places Upstox alongside Groww, Angel One and other brokers expanding from equities into fixed income for retail investors.
What Is Bond Investment in India?
Bond investment in India means lending money to a company or the government in return for regular interest and repayment of the principal on maturity. The investor buys a debt security with a fixed face value, a coupon rate that fixes the annual interest, and a maturity period after which the principal is returned. Listed bonds trade on stock exchanges in demat form under SEBI regulation.
A corporate bond is a debt instrument issued by a company to raise money directly from investors. A government bond is issued by the central or state government and carries sovereign backing. In India, the terms corporate bond and Non-Convertible Debenture (NCD) are used interchangeably for pure debt that is not converted into shares. Convertible debentures, which can turn into equity, form a separate category.
Common examples in India include bonds issued by public sector issuers such as PFC (Power Finance Corporation) and IRFC (Indian Railway Finance Corporation), infrastructure and housing finance companies such as NABARD, REC and SIDBI, and private non banking finance companies. Debt securities also include government securities (G-Secs), State Development Loans (SDLs), Treasury Bills for short term borrowing, and Sovereign Gold Bonds (SGBs) linked to gold prices.
How Corporate Bonds Work
Corporate bonds work as a loan contract between the investor and the issuing company. The investor pays the purchase price upfront. The company pays interest at the stated coupon rate each year and returns the face value when the bond matures. The effective annual return based on the purchase price and interest payments is called the yield to maturity.
Take a simple example. An investor holds a five year bond with a face value of ₹100 and a 10 percent annual coupon. The issuer pays ₹10 every year for five years and repays ₹100 with the final interest payment at the end of five years. If the investor buys the same bond in the secondary market for ₹95 or ₹105, the yield rises or falls accordingly.
Corporate bonds in India carry interest rates of about 7 to 14 percent per year, depending on the credit rating and tenure. AAA rated bonds from strong public sector issuers offer lower yields, close to government securities. Lower rated bonds offer higher coupons to compensate for higher default risk. Most bonds pay interest monthly, quarterly, semi annually or annually, and many listed bonds can be sold before maturity if buyers are available.
What Upstox Will Offer After SEBI Approval
Upstox Securities Pvt Ltd, the broking arm linked to RKSV Securities India Pvt Ltd, became active as an OBPP on the BSE on 25 September 2026 and was enabled on the NSE on 8 October 2026. Reports in late October 2026 said the company will soon launch direct bond investing on its app. The exact launch date was not announced.
The planned offering covers corporate bonds, government securities and Sovereign Gold Bonds, with investments starting at ₹1,000. The initial focus is expected to be on bonds rated between AAA and BBB minus, subject to availability. The company plans to prioritise relatively lower risk securities.
Earlier, Upstox offered bonds through a partnership with IndiaBonds, announced in August and September 2025. Under that arrangement, listed corporate bonds and state guaranteed bonds were shown inside Upstox, but execution and settlement ran on IndiaBonds as the registered OBPP. The new licence lets Upstox offer these products directly instead of routing orders through a third party.
Upstox was founded in 2009 as RKSV Securities by Ravi Kumar, Raghu Kumar and Shrini Viswanath. It entered retail broking in 2012, introduced paperless Aadhaar based account opening, and crossed 2 crore KYC registered customers in August 2026. More than 85 percent of its customers come from Tier 2 and Tier 3 cities. The bond licence fits its wider shift beyond equities into fixed deposits, margin funding, commodities and wealth products, a shift also seen at Groww, Zerodha and Angel One.
What Is the SEBI Framework for Online Bond Platform Providers?
An Online Bond Platform Provider (OBPP) is a company registered with a stock exchange to sell listed debt securities online to investors. SEBI, the statutory regulator for securities markets in India, created this framework in November 2022 under Regulation 51A of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. OBPPs must register with the NSE or BSE, follow disclosure norms, and offer only permitted products.
Nearly 40 firms have received OBPP approval since 2023. The list includes dedicated bond platforms such as IndiaBonds, Bondbazaar, Wint Wealth, Aspero and Altifi, along with large brokers such as Groww Invest Tech, Angel One and now Upstox Securities.
SEBI updated the framework on 14 August 2026 to ease compliance and widen the product list. OBPPs can now offer the following instruments:
| Category | Instruments Permitted |
|---|---|
| Listed corporate debt | Listed debt securities, municipal debt, securitised debt instruments |
| Public offers | Debt, municipal debt and securitised debt proposed to be listed through a public offer |
| Government debt | Listed G-Secs, State Development Loans, Treasury Bills, listed Sovereign Gold Bonds |
| Regulated financial products | Products regulated by SEBI, RBI, IRDAI, IFSCA and PFRDA, shown under a separate tab with clear labelling |
| Tax saving bonds | Bonds issued under Section 54EC of the Income Tax Act, 1961 or Section 85 of the Income Tax Act, 2025, with issuer level grievance disclosure |
For products regulated by the International Financial Services Centres Authority (IFSCA) at GIFT IFSC, OBPPs must follow stock broker norms for IFSC, meet FEMA and Liberalised Remittance Scheme limits, and label them clearly as international instruments. For 54EC capital gains bonds, OBPPs must disclose the lock in period, investment limit, non transferable nature and tax terms, and state that grievance redressal lies with the issuer. Every OBPP must also appoint a compliance officer under the SEBI (Stock Brokers) Regulations, 2026 with NISM Series III-A certification.
Corporate Bonds in India: Market Size and Retail Growth
The corporate bond market in India has grown steadily over the past decade. Outstanding corporate bonds rose from about ₹17.5 lakh crore at the end of FY 2015 to more than ₹60 lakh crore by July 2026, growing at roughly 12 percent per year. In FY 2025-26, companies raised about ₹9.11 lakh crore through corporate debt, nearly twice the amount raised through equity.
Despite this growth, corporate bonds form only 16 to 17 percent of GDP. That share is far below South Korea at about 79 percent, Malaysia at about 54 percent and China at about 38 percent. Private placements still dominate issuance, and most bonds come from top rated issuers. Retail participation remains low, and secondary market trading is thin.
Online bond platforms aim to change that pattern. In FY 2025-26, the registered client base of OBPPs rose from about 6 lakh to 15 lakh, while annual transaction value rose from about ₹7,100 crore to ₹26,000 crore. Lower entry tickets of ₹1,000 to ₹10,000, digital KYC, and direct access on broker apps have made company bonds accessible to first time investors beyond metro cities.
Corporate Bonds vs Government Bonds vs Fixed Deposits
Retail investors often compare corporate bonds with government bonds and bank fixed deposits (FDs). All three pay interest, but they differ sharply in safety, return and liquidity. Corporate bonds and government bonds are both debt securities, while an FD is a bank deposit insured up to a limit by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
| Feature | Corporate Bonds | Government Bonds | Bank Fixed Deposit |
|---|---|---|---|
| Issuer | Companies and NBFCs | Central or state government | Scheduled banks |
| Typical yield in 2026 | 7 to 14 percent per year | 6.7 to 7.1 percent per year | 6.5 to 7.5 percent per year |
| Safety | Depends on credit rating, from low risk for AAA to high risk for low grades | Highest, backed by sovereign guarantee | Very low risk, insured up to ₹5 lakh per depositor per bank |
| Liquidity | Moderate, listed bonds can be sold on exchange if buyers exist | Moderate, tradeable in secondary market | Low, premature withdrawal attracts penalty |
| Minimum investment | ₹1,000 to ₹10,000 on OBPPs | ₹10,000 through RBI Retail Direct | Typically ₹1,000 |
| NCD link | Most corporate bonds are NCDs, pure debt with no equity conversion | Not applicable | Not applicable |
Corporate bonds score higher on return than FDs and G-Secs, but lower on safety than both unless they carry a top rating. Debt mutual funds and corporate bond funds offer a diversified alternative, since the fund holds many bonds instead of one. Direct bond buyers must therefore check the rating, issuer track record and liquidity before comparing headline interest rates.
Are Corporate Bonds Taxable in India?
Yes, corporate bonds are fully taxable in India. Interest earned on corporate bonds is treated as income from other sources and taxed at the investor slab rate. Tax deducted at source applies at 10 percent when annual interest from one payer crosses ₹5,000, though the final tax depends on the total income slab.
Capital gains on sale or redemption follow separate rules. For listed bonds held for less than 12 months, short term gains are taxed at the slab rate. For listed bonds held for 12 months or more, long term gains are taxed at 12.5 percent without indexation under post July 2024 rules. Interest on tax free bonds is exempt, but any capital gain on sale remains taxable. Sovereign Gold Bonds held till maturity enjoy exemption on the redemption gain, while interest stays taxable. Corporate bonds get no deduction under Section 80C, unlike PPF, EPF or ELSS.
How Safe Are Corporate Bonds: Ratings, Risks and Liquidity
Corporate bonds are safe only to the extent the issuer repays on time. Safety is signalled by the credit rating, an opinion issued by SEBI registered agencies such as CRISIL, ICRA, CARE Ratings and India Ratings. Ratings run from AAA for the highest safety to D for default, with plus and minus modifiers for finer grades. Bonds rated AAA to BBB minus are called investment grade. Bonds rated BB and below carry higher credit risk.
| Rating Band | Meaning | Risk Level |
|---|---|---|
| AAA | Highest degree of safety | Lowest credit risk |
| AA | High degree of safety | Very low credit risk |
| A | Adequate degree of safety | Low credit risk |
| BBB | Moderate degree of safety | Moderate credit risk |
| BB, B, C, D | Rising risk of default to actual default | High to very high risk |
Three risks matter most for retail buyers. Credit risk is the danger that the company delays or defaults on interest or principal. Liquidity risk means the investor may not find a buyer quickly when selling before maturity, especially for low rated or thinly traded bonds. Interest rate risk means existing bond prices fall when market rates rise, though holding till maturity removes this price effect.
SEBI registration as an OBPP does not remove these risks. It ensures the platform is regulated, the bonds are listed, and key disclosures are shown. The investor must still read the rating rationale, check whether the bond is secured or unsecured, and match the maturity period and lock in terms with personal cash needs.
Key Takeaways
- Upstox Securities Pvt Ltd received SEBI approval as an Online Bond Platform Provider in October 2026 to sell corporate bonds directly from ₹1,000.
- SEBI created the OBPP framework in November 2022 under Regulation 51A, with nearly 40 firms approved through stock exchange registration since 2023.
- SEBI revised the OBPP rules on 14 August 2026 to allow IFSCA regulated products and Section 54EC tax saving bonds on bond platforms.
- Outstanding corporate bonds in India rose from ₹17.5 lakh crore in FY 2015 to over ₹60 lakh crore by July 2026, equal to about 16 to 17 percent of GDP.
- Interest on corporate bonds is taxed at the slab rate, while long term gains on listed bonds held for 12 months or more are taxed at 12.5 percent without indexation.
