How NRIs Can Invest in Indian Bonds?

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India has the largest overseas population in the world. As per the Ministry of External Affairs, about 1.71 crore Non-Resident Indians (NRIs) are living outside India (as of January 2025). And many of them look at their motherland as an investment destination.

But why? That’s largely because returns in India are often higher than those available in developed countries such as the United States and the United Kingdom. Also, investing in India allows NRIs to build assets in a “familiar market” that they understand better in terms of regulations, currency, and long-term growth prospects.

So, are you also looking to invest? Read this article to learn how you, as an NRI, can start investing in the Indian bond market. 

What Bank Accounts Do You Need to Invest in Indian Bonds?

To invest in bonds in India, NRIs must use “designated bank accounts” approved under Indian regulations. The two options available here are:

• The NRE (Non-Resident External) account
  or
• The NRO (Non-Resident Ordinary) account

If we talk about the primary difference, an NRE account is meant for foreign income invested in India, while an NRO account is used to manage income earned within India. Realise that your choice of account directly impacts taxation and repatriation of bond investments. 

For more clarity, let’s study some major differences between NRE and NRO accounts:

How NRIs Can Invest in Bonds in India: Step-by-Step Guide 2026

Studies show that FPIs (Foreign Portfolio Investors), including NRIs, are investing heavily in Indian corporate bonds, with ₹20,996 crore inflows in May 2025 (the highest monthly inflows in nearly a decade). 

But why such popularity? That’s largely because bonds allow NRIs to:

• Diversify their portfolio 
• Earn competitive interest rates
• Receive pre-determined interest payments at regular intervals
• Preserve capital

If you are also looking to invest in Indian bonds, you may follow this defined process set by Indian banking and financial regulators:

Step 1: Open an NRE or NRO Bank Account

As mentioned before, the first requirement for any NRI investment in India is an NRE or NRO bank account. Indian regulations do not allow NRIs to invest directly using overseas bank accounts. Note that:

• All money used to buy bonds must come from either an NRE or an NRO account

• All interest payments and maturity amounts are credited back to the same account.

Step 2: Obtain a Permanent Account Number (PAN)

If you have surrendered, you need to reapply for the Permanent Account Number, or PAN. You will need it for:

• Opening a Demat account
• Purchasing bonds
• Reporting income to tax authorities

Without a PAN, no financial investment in India is permitted for NRIs. The PAN links all your investments to your tax records in India. Even if your bond income is tax-free, the PAN is still required for regulatory tracking.

Step 3: Complete the KYC (Know Your Customer) Process

KYC is a legal requirement that verifies the identity and residency status of an investor. Banks, brokers, and bond platforms cannot allow investments unless KYC is completed. 

But why this mandate? This step:

• Prevents the misuse of the financial system
• Ensures compliance with Indian regulations

For NRIs, KYC usually includes a copy of the PAN card, passport, visa, overseas address proof, and a recent photograph. Some institutions may also request proof of Indian address, if available. 

Note that KYC is generally a one-time process. Once completed, it allows you to open investment accounts and access bond markets without repeating the verification each time.

Step 4: Open a Demat and Trading Account

Bonds in India are held in electronic or demat (dematerialized) form (similar to shares). Now, to invest in Indian bonds, you will need these two accounts:

• A Demat account to store these bonds digitally
• A trading account to place buy or sell orders

Both accounts are linked to your NRE or NRO bank account so that funds move automatically during transactions. 

Step 5: Understand the Fully Accessible Route (FAR)

The Reserve Bank of India introduced the Fully Accessible Route (FAR) to allow NRIs and other foreign investors to invest in certain government bonds without investment limits. 

Under this route, specified government securities are open to foreign investment without any ceiling on the amount invested. This is relevant for NRIs who want exposure to Indian government bonds, which are considered low-risk instruments. 

However, please note that not all government bonds fall under FAR, so investors must check eligibility before investing. 

Step 6: Place the Bond Investment Order

After completing all account setups, you can begin investing in Indian bonds. Now, bonds can be purchased in two ways. 

• From the primary market, where you apply for bonds when they are issued for the first time by the government or a company.
  or
• From the secondary market, where you buy existing bonds from other investors through a trading platform.

Both these markets can be accessed online via leading bond platforms such as GoldenPi. Here you can access the list of “already issued bonds” available for trading and even apply for the latest NCD IPOs. 

To invest via GoldenPi, all you have to do is:

• Complete your KYC
• Link your Demat account
• Browse different bond options
• Make the payment online
• Bonds are credited directly to your Demat account. 

Interest payments and principal amount on maturity are then credited to your linked NRE or NRO account.

In Summary, You Will Need an NRE/ NRO Account + a Demat Account To Invest in Indian Bonds

So now you know that to invest in Indian bonds as an NRI, you first need to open either an NRE or an NRO account. The right choice? It depends on the:

• Source of your income
  and
• Your repatriation needs

Be aware that NRE accounts are generally used for tax-free investment of foreign income with full repatriation benefits. In contrast, NRO accounts are designed for handling and investing income earned within India. They attract both tax liabilities and repatriation limits.

Next, you must open a Demat and trading account and complete the KYC process with a broker or bond platform. Once registered, you can invest in already issued bonds through the secondary market or apply for newly launched NCD IPOs in the primary market.

To access both options, you may consider GoldenPi, a SEBI-registered debt broker and OBPP license holder. Here, the entire investment process is online, with no need for in-person branch visits.

FAQs on How NRIs Can Invest in Indian Bonds?

Can I invest in Indian bonds only through traditional brokers?

No, NRIs can also invest through online bond platforms such as GoldenPi. All you must do is complete your KYC, link your Demat account, and then explore the several available bond options. Lastly, make payments online, and receive the bonds directly in your linked Demat account.

As an NRI, how can I choose between NRE and NRO accounts?

If you are investing money earned outside India and want the freedom to take both capital and returns back abroad without Indian tax, an NRE account may be suitable. However, if the investment is made using income earned in India (such as rent or dividends), an NRO account is required. In this case, your interest is taxable, and repatriation is limited.

Do I need to convert my foreign income into INR before investing?

Yes. To invest in Indian bonds, your foreign income must be converted into Indian rupees. This happens automatically when you transfer funds from your overseas bank account to an NRE or NRO account in India. 

Can I receive interest and maturity proceeds in my NRE/ NRO account?

Yes, both interest payments + maturity proceeds from Indian bonds are credited directly to the NRE or NRO account, which is linked to your Demat account.

Disclaimer:

This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the debt securities/ municipal debt securities/ securitised debt instruments are subject to risks, including delay and/ or default in payment. Read all the offer-related documents carefully.

Bonds or non-convertible debentures (NCDs) are regulated by the Securities and Exchange Board of India and other government authorities. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.