List of Perpetual bonds in India 2026

Perpetual bonds have become an important part of the fixed-income market in India, especially for investors looking for regular income from long-term instruments. These bonds are primarily issued by banks and financial institutions to strengthen their capital base while offering investors periodic interest payouts. 

Unlike traditional bonds, perpetual bonds do not have a fixed maturity date, which means they can continue paying interest indefinitely unless the issuer exercises the call option. 

Continue reading to learn about perpetual bonds in India in 2026 to help investors understand these instruments.

What are Perpetual Bonds?

Perpetual bonds are fixed-income securities that do not have a fixed maturity date. Unlike traditional bonds, the principal amount is generally not repaid on a specific date, and investors receive periodic interest payments for an indefinite period. These bonds are typically issued by banks or financial institutions to raise long-term capital. While they offer regular interest income, the issuer may have the option to call or redeem the bond after a certain period, depending on the terms of the issue.

Key Features & Benefits of Perpetual bonds

Now, you know what a perpetual bond is, let’s check some of the features and benefits offered by these bonds-

No Fixed Maturity Date

Perpetual bonds do not have a fixed maturity period. Investors receive interest payments for an indefinite period unless the issuer decides to redeem the bond under the call option.

Regular Interest Payments

These bonds generally offer periodic interest payouts, which can be paid annually or semi-annually depending on the bond terms.

Higher Interest Rates

Perpetual bonds usually offer higher interest rates compared to many traditional bonds to compensate investors for the longer investment horizon.

Issued by Banks and Financial Institutions

Perpetual bonds are commonly issued by banks to strengthen their capital base and meet regulatory requirements.

Call Option for Issuers

Many perpetual bonds come with a call option, allowing the issuer to redeem the bond after a specified period, usually after 5 or 10 years.

Portfolio Diversification

Adding perpetual bonds to an investment portfolio can help diversify holdings by including fixed-income instruments.

Suitable for Income-Oriented Investors

These bonds may appeal to investors looking for a regular income stream rather than capital appreciation.

List of Perpetual Bonds in India 

Who Should Invest in Perpetual Bonds?

Perpetual bonds may be suitable for investors who are comfortable with long-term investments and are primarily looking for regular interest income. Since these bonds do not have a fixed maturity date, they are generally considered by individuals who do not require the principal amount back within a specific time frame.

Income-focused investors may consider perpetual bonds because they offer periodic interest payments. These bonds may also suit experienced investors who understand fixed-income instruments and the risks associated with long-duration securities.

They can also be considered by portfolio diversifiers who want to include different types of bonds alongside other investments. However, investors should carefully evaluate factors such as interest rate changes, credit quality of the issuer, and liquidity before investing in perpetual bonds.

Risks Involved in Perpetual bonds

Perpetual bonds offer returns but have some risks involved, here are some of the risks mentioned below-

No Fixed Maturity

Perpetual bonds do not have a maturity date, which means investors may not receive the principal amount back unless the issuer decides to redeem the bond. This can make the investment less suitable for those who need funds at a specific time.

Interest Rate Risk

The price of perpetual bonds can be highly sensitive to changes in interest rates. If market interest rates rise, the market value of existing perpetual bonds may decline.

Call Risk

Most perpetual bonds come with a call option that allows the issuer to redeem the bond after a certain period. If interest rates fall, the issuer may call the bond early, which may affect the investor’s expected income.

Credit Risk

Since perpetual bonds are usually issued by banks or financial institutions, there is a risk related to the financial stability of the issuer. If the issuer faces financial difficulties, interest payments may be delayed or suspended.

Liquidity Risk

Perpetual bonds may not always have high trading volumes in the secondary market. This could make it difficult for investors to sell the bond quickly without accepting a lower price.

Interest Payment Risk

In some cases, especially with bank-issued perpetual bonds, issuers may have the option to skip or defer interest payments under certain conditions, which can impact regular income for investors.

Tax Applicability on Zero Coupon Bonds

Taxation on zero coupon bonds in India is governed by the Income Tax Act, 1961. Since these bonds do not pay periodic interest, they are issued at a discount and redeemed at face value at maturity. The difference between the purchase price and the redemption value is treated as income for tax purposes.

Capital Gains Tax

Income from zero coupon bonds is generally taxed as capital gains rather than interest income.

Long-Term Capital Gains (LTCG)

If a listed zero coupon bond is held for more than 12 months, the gains may be classified as long-term capital gains. These gains are taxed at the applicable LTCG tax rate as per prevailing tax laws.

Short-Term Capital Gains (STCG)

If the bond is sold within 12 months of purchase, the profit is treated as short-term capital gains and taxed according to the investor’s income tax slab.

Tax on Sale Before Maturity

If an investor sells the bond in the secondary market before maturity, the difference between the purchase price and selling price is also taxed under capital gains.

No Periodic Interest Taxation

Since zero coupon bonds do not provide regular interest payments, there is no annual interest income to declare. Tax liability usually arises only when the bond is sold or redeemed at maturity.

Disclaimer

The Bank bond data on this page is sourced from the NSDL website and is based on publicly available market information as on 10 March 2026. Prices, yields, trade values, and other related details are subject to change in real time depending on market movements and liquidity. This content is intended solely for informational and educational purposes and should not be considered as investment advice, recommendation, or an offer to buy or sell any securities.