How to buy a bond on Zerodha

From WebNotes, a public knowledge base. Last updated . Reading time ~9 min. Level: Beginner.

This guide explains how to buy listed bonds and Non-Convertible Debentures (NCDs) through Zerodha’s Kite platform. The process covers the exchange-traded secondary market for bonds listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). For primary NCD applications during new issue windows, investors must follow a separate process through the electronic book mechanism on NSE or BSE; that process is not covered here. For information on buying Government Securities or T-Bills, see the dedicated guides.

The encyclopedic background on the bonds segment on Zerodha covers the types of bonds available, pricing mechanics, charges, and tax treatment in detail. This article focuses on the operational procedure.

Step-by-step procedure

Ensure the demat and bank accounts are active

Before placing an order, confirm that your demat account is active and not frozen. Log in to Zerodha Console and check the Account section for account status. Verify that your primary bank account appears under Profile → Bank details and that the balance in your Zerodha ledger (or the available funds shown on Kite) is sufficient to cover the expected settlement amount.

Bond purchases settle on T+2, meaning the funds are debited two business days after the trade date. Zerodha deducts the settlement amount from your ledger balance; if the ledger is insufficient, Zerodha’s internal settlement process may draw from funds available in the account.

Find the bond ISIN or trading symbol on Kite

Open Kite at kite.zerodha.com and use the universal search bar at the top (keyboard shortcut Ctrl+/ on web). Type the bond name, issuer name, or ISIN. For example:

  • Search “Muthoot NCD 2025” for Muthoot Finance debentures.
  • Search “IN0620130011” to find a bond by ISIN directly.
  • Search “NHAI bond” to list NHAI-issued bonds.

Kite displays results across all segments. Bond results appear labelled with the exchange (NSE or BSE), the debt market segment designation, and the instrument name which typically includes the issuer name, coupon rate, and maturity date. Verify you are looking at the correct series: many issuers have multiple outstanding series with different maturities and coupon rates. Add the bond to a watchlist using the + icon.

If you cannot find a bond on Kite, it may not be available for retail trading through Kite’s retail debt market access. Some bonds trade exclusively on the Wholesale Debt Market (WDM) or are not exchange-listed. In that case, platforms like GoldenPi that aggregate over-the-counter bond transactions may be alternatives.

Check the order book depth and accrued interest

Click on the bond in your watchlist to open the detail panel. Review:

  • Last traded price (LTP): The most recent execution price expressed as a percentage of face value or in rupee terms depending on how the instrument is quoted.
  • Market depth (order book): The five best bids (buyers) and five best offers (sellers). Thin order books with wide spreads are common in listed bonds; a bid-ask spread of Rs 5 to Rs 20 on a Rs 1,000 face value bond is not unusual.
  • Accrued interest: Bond prices on the exchange are quoted as clean prices (excluding accrued interest) or dirty prices (including accrued interest), depending on the exchange’s convention for that instrument. The settlement amount that Zerodha deducts from your account will be the dirty price (clean price plus interest accrued since the last coupon date).

If a bond has not traded for several days, the LTP is stale. Use the order book to identify the current market price. If there are no sellers in the order book, the bond has no immediate liquidity and a buy order will rest unexecuted.

Place a limit buy order

Click the Buy button (blue B on the instrument row, or press B on the web keyboard shortcut). The order form opens.

  • Product code: Select CNC (Cash and Carry) for delivery-based bond purchases. CNC bonds settle in the demat account. Do not use MIS for bonds unless you specifically intend to close the position the same day.
  • Order type: Select Limit. Market orders for thinly traded bonds risk executing at a price significantly worse than the current LTP. A limit order controls the maximum price you pay.
  • Quantity: Enter the number of units (bonds). For NSE’s Retail Debt Market, bonds typically trade in minimum lots of 1 unit (face value Rs 1,000). Check the lot size for the specific bond as it varies.
  • Price: Enter your desired buy price per unit. This is typically expressed in rupees (e.g., Rs 1,020 for a bond with a face value of Rs 1,000 trading at a premium). Kite displays the estimated order value below the price field.

Review the order summary and click Buy to submit. The order goes to the exchange’s debt market segment.

Monitor order status in the order book

After submission, navigate to Orders on Kite to monitor the status. Bond limit orders may remain Open for extended periods in thin markets. If you need the order executed sooner:

  • Increase the limit price toward the best offer price shown in the market depth.
  • Consider whether the bond is actively traded on the other exchange (NSE versus BSE) and place an order there instead.

Do not place market orders in thin bond markets. An unmatched offer at a significantly higher price can result in a market order executing far above the fair value.

Zerodha does not charge for unexecuted or cancelled orders. A cancelled pending limit order returns the reserved funds to your ledger immediately.

Verify demat credit on T+2

On the second business day after trade execution, the bond units are credited to your demat account. On Kite, they appear in Portfolio → Holdings with the bond’s ISIN, the number of units, the average purchase price, and the current market value.

To verify, also check Zerodha Console:

  • Go to Portfolio → Holdings.
  • Find the bond by name or ISIN.
  • The statement shows units held, face value, and demat credit date.

Interest (coupon) payments from the bond will be credited directly to your primary bank account on the coupon payment dates specified in the bond prospectus. These payments are not visible on Kite; they appear as bank credits. Track them on Zerodha Console funds statement or your bank statement.

What can go wrong

  • Order remains open indefinitely. Bond markets are thinly traded. If no seller has posted an offer at or below your limit price, the order will not execute. Raise the limit price or accept that the bond may not be available at your desired price.
  • Settlement amount exceeds expected cost. The settlement includes accrued interest on top of the traded price. If the bond’s last coupon date was several months ago, the accrued interest component can be substantial. Factor this in when calculating the cost basis.
  • Bond not visible on Kite. The bond may not be listed on the retail debt market segment accessible through Kite. Verify on the NSE or BSE bond page whether the bond is listed and in which segment.
  • Demat credit delayed beyond T+2. Occasionally, debt segment settlements have processing delays. If the bond has not appeared by the end of T+3, contact Zerodha support with the order details.
  • Tax treatment misunderstood. Bond interest is taxed as income at your slab rate. Capital gains on bonds held less than 36 months are short-term; gains on bonds held 36 months or more qualify for long-term capital gains treatment at 20% with indexation. These rules differ from equity taxation. See capital gains tax in India for the current framework. For tax-free bonds, the interest is exempt; confirm the specific bond qualifies before relying on that exemption.

Conflict of interest disclosure

WebNotes Editorial Team has no financial relationship with Zerodha, NSE, BSE, GoldenPi, or any bond issuer. This guide is produced for informational purposes only and does not constitute investment advice. Readers should verify all details on Zerodha’s official support portal before transacting.

References

  1. SEBI Circular SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2023/99, Retail debt market framework.
  2. NSE, Retail Debt Market (RDM) segment operational guidelines, nseindia.com.
  3. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Regulation 57, Debt securities.
  4. Income Tax Act, 1961, Section 112 (LTCG on listed bonds), Section 56 (interest income).
  5. Zerodha Support, “How to buy bonds on Kite”, support.zerodha.com.
  6. Finance Act, 2023, Amendment to holding period for LTCG on debt instruments.

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed
Conflicts of interest
WebNotes is independent. No relationship with any broker, registrar or bank named in this article.