Short Term Bonds Maturing within 3 Years

The shorter holding period also limits how much the bond's market price can swing between purchase and maturity. That is a feature investors with near-term goals tend to look for.

What are Short-Term Bonds?

Short-term bonds are listed debt securities with a remaining tenure of under 36 months. The category covers corporate NCDs (Non-Convertible Debentures), PSU bonds, government securities, and select bank bonds, as long as the maturity date sits within the next three years.

When you buy one, you are lending money to the issuer for that period. The issuer pays a fixed coupon over the tenure. On the maturity date, your principal returns to your bank account. These are sometimes called short-term debt instruments in fixed-income markets. The category also overlaps with what investors call liquid fixed-income options, since the short tenure brings money back relatively quickly.

Why Investors Pick a Short Tenure

A short tenure has three common reasons behind it:

1. Defined goal. If you have a known cash need in the next 1-3 years (a school fee, a vehicle, or a planned home move), the bond's maturity date can line up with the goal.
2. Lower interest rate sensitivity. Long-tenure bonds react more sharply when market rates change. Short-tenure bonds move less because they are closer to maturity.
3. Faster reinvestment. As the bond matures, you can redeploy the money into fresh listings at the rates available at that time.

Current Yields on Short-Term Debt Instruments On GoldenPi

Today, short-term debt instruments in this category are mostly NBFC NCDs. Ratings sit in the BBB to A band. Yields run from 11.40% to 14%. 

The list rotates as new bonds get added and existing ones close.

A Simple Example

Suppose you invest Rs. 30,000 in a 24-month bond paying 12% per year, with monthly payouts. Annual interest works out to Rs. 3,600, which is roughly Rs. 300 a month. Over 24 months, the total interest comes to Rs. 7,200. At maturity, your Rs. 30,000 principal returns.

Risks to Understand

A short maturity does not remove credit risk. Three risks matter:

1. Credit risk. The issuer may fail to pay you on time. NBFCs in the BBB to A band are more sensitive to sector cycles and loan-book stress than AAA paper.
2. Liquidity risk. The secondary market for some of these bonds can be thin. If you want to exit before maturity, the price you get may be lower than you expected.
3. Reinvestment risk. When the bond matures, the new rates available may be lower than the rate you locked at issue. This is a normal feature of any short-maturity holding.

How to Invest on GoldenPi:

GoldenPi is a SEBI-registered Online Bond Platform Provider. The steps to invest in short-term bonds:

1. Log in to your KYC-verified account.
2. Open the Bonds Maturing within 3 Years (Short Term) section.
3. Filter by rating, yield, payout frequency, or issuer.
4. Read the bond details and the offer document.
5. Pay through NEFT, RTGS or UPI from your bank account.
6. The bond enters your demat after settlement.

Taxation

Interest is added to your total income and taxed at your slab rate. Once annual interest from one issuer crosses Rs. 10,000, TDS at 10% applies on listed corporate NCDs under Section 193 of the Income Tax Act.

If you sell within 12 months, the profit is taxed at a slab. Beyond 12 months, the long-term capital gain on a listed bond is taxed at 12.5% without indexation under the Finance (No. 2) Act, 2024.

Conclusion:

Short-term bonds suit investors with a defined need in the 1-3 year window. The shorter wait keeps interest rate exposure low and brings the principal back sooner for redeployment. Many investors treat this segment as part of their liquid fixed-income options, where the maturity profile matches near-term needs.

The trade-off is credit risk. Most listings sit in the BBB to A band and offer higher yields to compensate for the lower rating. The credit rating, the security cover, and the issuer's recent financials matter as much as the headline coupon.

GoldenPi keeps the listings updated as new bonds get added and existing ones close. Ratings and yields reflect the latest disclosures from each issuer.

Top 5 Short Term Bonds Maturing within 3 Years