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NameIssue SizeMaturityCoupon
Bank Of BarodaCRISIL AAAINE028A080421000.00Cr01 Nov 20239.80 %
Bank Of BarodaCRISIL AAAINE028A080591000.00Cr17 Dec 20239.73 %
Canara BankCRISIL AAAINE476A092491500.00Cr03 Jan 20249.73 %
Canara BankCRISIL AAAINE476A092561000.00Cr27 Mar 20249.70 %
HDFC Bank LimitedCRISIL AAAINE040A085912000.00Cr21 Oct 20249.60 %
Indian BankCRISIL AAAINE428A081011500.00Cr27 Dec 20299.53 %
HDFC Bank LimitedCRISIL AAAINE040A08526475.00Cr13 Aug 20249.50 %
HDFC Bank LimitedCRISIL AAAINE040A08AE51000.00Cr28 Aug 20249.34 %
HDFC Bank LimitedCRISIL AAAINE040A08476510.00Cr24 Jun 20249.24 %
HDFC Bank LimitedCRISIL AAAINE040A087322953.00Cr16 Oct 20289.05 %

Benefits of Investing In Bank Bonds

  • Safety
    Bank bonds are generally regulated by the Reserve Bank of India and SEBI. The RBI ensures that banks are highly regulated and secure. Also, the Government of India hold’s majority of shareholding in PSU banks, which ensures the stability of banks in crisis times.
  • Portfolio Diversification
    A perfect portfolio has well-diversified investments to reduce the risk to investors. Bank Bonds diversify an investor's portfolio as they offer minimal risk compared to other investment instruments such as equities, mutual funds, or real estate.
  • Better Returns
    Bank bonds give a higher return to an investor when compared to fixed deposits. Retired investors prefer these bonds to ensure a fixed income source for a long time.
  • Reinvestment Risk 
    Bank bonds are not subject to reinvestment risk. An investor can avoid the tedious effort required to shortlist other investment alternatives when the bond matures.  
  • No Penalties
    Unlike fixed deposits which attract penalties for premature withdrawal, an investor doesn’t have to pay any penalties for premature withdrawal of bank bonds don’t attract any penalties, unlike FDs in terms of premature withdrawal. You can sell bank bonds in the secondary market anytime.

Risks of Investing In Bank Bonds

  • Taxable
    Bank bonds don't come with any tax benefit. TDS is deducted by the bank on any interest earned by an investor.
  • Interest Rate Risk
  • Banking institutions are exposed to interest rate risk as the rate at which the loans are given is fixed, whereas the rate at which it has raised money from depositors/investors is variable.
  • Inflation Risk
    Bank bonds’ interest rates are fixed for the given tenure of deposit, therefore it might fail to beat the inflation risk. For instance, the bank bond gives an investor a return of 6% and the inflation rate is 7%. That means the investor is earning a negative return of his investment.

List of Banks That Offer Bonds

  • Bank Of Baroda
    Bank of Baroda issued unsecured non-convertible fully paid-up Basel III Additional Tier 1 Bonds. The Bond was listed on BSE and NSE stock exchange on 22nd July 2020. On 09th July 2020, India Rating and Research Pvt. Ltd gave AA+ rating to this Bond.
  • State Bank Of India
    State Bank of India issued an unsecured listed Basel III Additional Tier 1 non-convertible bond. This instrument is issued in Private Placement (EBP) mode. The Bond was listed on BSE and NSE stock exchanges on 19th October 2021
    On 1st October 2021, India Rating and Research Pvt. Ltd rated AA+ to this Bond.
  • Canara Bank
    Canara Bank issued 8.24% unsecured rated listed non-convertible perpetual BASEL III Additional Tier 1 bond 2022-23. It is a simple coupon bond with a full redemption option. The Bond is listed on NSE stock exchange on 20th July 2022. India Rating and Research Pvt. Ltd gave AA+ rating to this Bond on 12th July 2022.
  • HDFC Bank
    HDFC Bank Limited issued unsecured listed Additional Tier 1 non-convertible perpetual bonds in the nature of debenture. This instrument was issued in Private Placement (EBP) mode, and the bond was listed on BSE and NSE stock exchanges on 9th September 2022. India Rating and Research Pvt. Ltd rated AA+ rating to this Bond on 22nd March 2022.
  • Punjab National Bank
    Punjab National Bank issued 8.30% unsecured listed Basel III compliant Additional Tier I perpetual non-convertible bond. The bond was listed on the BSE stock exchange on 22nd September 2022. India Rating and Research Pvt. Ltd gave AA+ rating to this bond on 21st September 2022.

FAQs about Bank Bonds

What is the risk associated with bank bonds?

Bank bonds carry risks like credit risk and interest rate risk. Credit risks refer to the possibility of the bank defaulting on interest payments or the repayment of the principal amount. Interest rate risk arises from changes in interest rates, which can affect the value of the bond in the secondary market.

How are bank bond interest rates determined?

The interest rates on bank bonds are influenced by various factors like prevailing market rates, the creditworthiness of the bank issuing the bond, and the bond term. Usually, banks offer higher interest rates on bonds with longer maturities or those perceived to have higher credit risk.

Are bank bonds safe investments?

Banks issue three kinds of bonds: Subordinate Debt, Unsecured Regular Bonds and AT1 or perpetual bonds. And all these are unsecured bonds. Therefore, in terms of safety, they are relatively unsafe compared to other fixed income securities.
Disclaimer: The facts and information on this page are for information and awareness purposes only. No information provided here is intended towards any specific user and should not be construed as investment advice or a recommendation of any kind whatsoever. You are requested to consult with your professional investment advisor or tax advisor for specific directions on any investments in any securities including the bonds mentioned on this page before making any investment decision. Wint Wealth shall not be liable for any losses incurred by you based on an investment decision utilising the information on this page.