Plan your investment
What Our Plans Cover
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A perpetual debt instrument with n...
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Coupon payments at the stated rate...
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Issuer call option at defined date...
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Listing on the exchange
Who Can Consider This Plan?
- Indian resident individual, HUF, trust, firm or company
- NRIs, subject to the specific issue permitting NRI investment
- A demat account for holding the securities
- PAN and completed KYC
- Minimum investment as specified in the issue terms
What May Not Be Covered?
- Any maturity date or obligation to repay principal
- Any assurance that the issuer will exercise the call
- Protection against coupon skipping in defined circumstances
- Protection against write-down in a resolution scenario
- Suitability as a substitute for conventional fixed income
Always check the policy wording before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading investments companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced investments professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
A perpetual bond has no maturity date. The issuer pays a coupon indefinitely and may, but need not, redeem the bond at defined call dates. Bank perpetual bonds issued as additional tier 1 capital are the most common variety in India.
The high coupon reflects genuinely unusual risks. The issuer can skip coupon payments in certain circumstances without triggering a default. In a resolution scenario, these instruments can be written down entirely — ahead of equity in some structures — and Indian investors have experienced exactly that outcome.
The market convention is that issuers call these bonds at the first call date, and investors have historically priced them as though that were certain. It is not. An issuer that chooses not to call leaves holders with an instrument that never matures.
Who should consider it
Sophisticated investors who understand additional tier 1 structures and can absorb a total write-down. Institutional and high net worth investors sizing the position as a genuine risk asset rather than as fixed income.
It is not appropriate for investors treating this as a substitute for deposits or conventional bonds, whatever the coupon suggests.
Benefits
- Coupons materially above conventional bonds
- Issued by large banks and established institutions
- Listed and tradable on the exchange
- Call dates provide a probable, though not certain, exit point
- Regular income while coupons are paid
What is included, and what is not
Read the right-hand column first. It is the one that tends to surprise people later.
Included
- A perpetual debt instrument with no maturity
- Coupon payments at the stated rate and frequency
- Issuer call option at defined dates
- Listing on the exchange
Not included
- Any maturity date or obligation to repay principal
- Any assurance that the issuer will exercise the call
- Protection against coupon skipping in defined circumstances
- Protection against write-down in a resolution scenario
- Suitability as a substitute for conventional fixed income
Terms vary between providers and between plans from the same provider. The offer document you receive is what governs — we will walk you through it before you commit.
How it works with us
- 1 We separate the two risks before anything else Credit risk is whether you get repaid. Rate risk is what the bond is worth if you sell early. Different risks, different answers.
- 2 Horizon matched to maturity A bond held to maturity behaves very differently from one sold in year two. That decision comes before choosing the issuer.
- 3 Rating and issuer examined properly A yield well above the market is telling you something. We read the rating rationale, not just the letter.
- 4 Purchase through the exchange or a registered platform Bonds settle into your demat account. We handle the mechanics and confirm what you actually bought.
- 5 Coupons tracked, maturity diarised Interest dates, reinvestment and redemption. Bonds are simple to hold and easy to forget about.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- Indian investors have had these instruments written down to zero. That is not a theoretical risk in this category — it has happened.
- The call is the issuer's option, not yours. Pricing the bond as though redemption at the first call date is certain is exactly the assumption that has caught investors out.
- Coupons can be skipped without a default being triggered. That is a structural feature, not a failure of the instrument.
- This is a risk asset carrying an equity-like outcome in stress, with a bond-like coupon in normal times. Size it as the former, not the latter.
- If the coupon is the reason you are interested, the coupon is telling you about the risk rather than about an opportunity.
Documents required
- PAN card
- Aadhaar or other identity proof
- Address proof
- Demat account details
- Bank account proof for coupon and redemption credit
- Completed KYC with the intermediary
Frequently Asked Questions
If there is no maturity, how do I get my money back?
By selling in the market, or if the issuer exercises a call option at one of the defined call dates. The call is entirely at the issuer's discretion — there is no obligation to redeem, and an issuer that chooses not to leaves you holding an instrument that never matures.
Can the issuer really skip a coupon?
Yes, in defined circumstances, without that constituting a default. It is a structural feature of these instruments rather than a failure, and it is one of the reasons the coupon is higher than on conventional bonds.
Can I lose all my principal?
Yes. In a resolution scenario these instruments can be written down entirely, and Indian investors have experienced exactly that outcome. This is the single most important thing to understand about the category.
Why do investors buy them then?
For the coupon, and on the assumption that a large issuer will call at the first opportunity and never face resolution. Both assumptions have held most of the time and failed some of the time, and the failures have been complete rather than partial.
Are these suitable for a retail investor?
Generally no. The high minimum reflects the intended investor base, and the structure requires understanding additional tier 1 mechanics and being able to absorb a total loss. Treating these as fixed income because they pay a coupon is the mistake the category punishes.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.