Monthly Income Bonds are an excellent tool for generating predictable, stable income. Whether you are planning for retirement or looking to build consistent cash flow, these bonds offer a balanced combination of safety and returns.
For investors seeking reliable monthly cash flow, Monthly Income Bonds have become one of the most preferred investment options in India. Whether you are planning for retirement, building passive income, or looking for predictable financial support, these bonds can help you generate a steady, consistent monthly payout.
At BondsAdda, we simplify bond investing by connecting you with curated, high-quality monthly income bond opportunities so you can invest confidently and earn consistently.
What Are Monthly Income Bonds? (Simple Definition)
A Monthly Income Bond is a debt instrument that pays interest every month instead of quarterly, semi-annually, or annually.
You lend money to an issuer—such as a government body, PSU, or private company—and they pay you regular monthly interest while returning your principal at maturity.
Why They Are Popular
- Ideal for retirees
- Useful for monthly household expenses
- More stable than equity-linked investments
- Often offer higher returns than bank FDs, depending on issuer
How Do Monthly Income Bonds Work? (Example)
Consider the following example:
Investment Details
- Investment Amount: ?5,00,000
- Type: Corporate Monthly Income Bond
- Coupon Rate: 8.4% annually
- Tenure: 7 years
Step 1: Calculate Annual Interest
?5,00,000 × 8.4% = ?42,000 per year
Step 2: Calculate Monthly Interest
?42,000 ÷ 12 = ?3,500 per month
You will receive ?3,500 every month for 7 years, and at maturity, your principal of ?5,00,000 is returned.
Types of Monthly Income Bonds in India
Monthly income investments come in different forms depending on the issuer and risk level.
1. Government and PSU Monthly Income Bonds
Issued by Government of India entities or PSUs, these bonds are the safest category.
Risk Level: Very Low
Returns: Moderate
Examples
- NHAI Bonds
- PFC Bonds
- REC Bonds
- RBI Floating Rate Savings Bonds (2020)
- Post Office Monthly Income Scheme (POMIS)
These are ideal for conservative investors who prioritize capital safety.
2. Corporate Monthly Income Bonds (NCDs)
These are Non-Convertible Debentures issued by corporations.
Risk Level: Low to High (depends on rating)
Returns: Higher than government bonds
Typical Yield (2025): 8% – 11.25%
Examples
BondsAdda.com tracks upcoming NCD issues and provides research-based recommendations.
3. Mutual Fund Monthly Income Plans (MIPs)
These are not bonds, but mutual fund schemes that target monthly dividends. Dividends are not guaranteed.
Risk Level: Moderate
Returns: Variable (market-linked)
Examples
- ICICI Prudential MIP
- SBI Monthly Income Plan
Good for investors seeking slightly higher returns with some equity exposure.
Comparison Table: Monthly Income Investment Options
|
Feature
|
Govt/PSU Bonds
|
Corporate NCDs
|
MIPs
|
|
Risk
|
Very Low
|
Low to High
|
Moderate
|
|
Returns
|
6–8%
|
8–11%
|
Variable
|
|
Liquidity
|
Medium
|
Low to Medium
|
High
|
|
Income Guarantee
|
Yes
|
Yes
|
No
|
|
Best For
|
Safety-focused investors
|
Income seekers, higher returns
|
Moderate risk investors
|
Popular Monthly Income Instruments (India – 2025-26)
Corporate NCDs with Monthly Interest Options
Common issuers include:
These typically offer higher interest rates and flexible tenures.
Post Office Monthly Income Scheme (POMIS)
- Tenure: 5 years
- Backed by the Government of India
- Very popular among retirees
Senior Citizens’ Savings Scheme (SCSS)
- Designed for individuals aged 60 and above
- Monthly interest payout
- Offers tax benefits under Section 80C
Advantages of Monthly Income Bonds
Predictable Monthly Income
Ideal for covering routine expenses without touching your savings.
Capital Protection
Safer than market-linked products.
Attractive Yields
Higher-than-FD income when choosing high-rated NCDs.
Diversification
Reduces overall portfolio volatility.
No Principal Withdrawal Required
Your investment stays intact while generating income.
Risks You Should Be Aware Of
Interest Rate Risk
Bond prices fall when market interest rates rise.
Credit Risk
Corporate issuers could default. Always choose AAA or AA rated bonds.
Liquidity Risk
Some NCDs may not be easily sold in the secondary market.
Inflation Risk
Fixed monthly payouts may lose purchasing power over time.
Who Should Invest in Monthly Income Bonds?
This investment type suits:
- Retirees seeking stable income
- Homemakers and conservative investors
- Professionals wanting passive income
- Parents planning regular education expenses
- Investors who prefer predictable returns
FAQs
1. What are the best monthly income bonds available in India?
High-rated corporate NCDs (AAA/AA), RBI floating bonds, POMIS, and PSU bonds are among the best monthly income options in 2025.
2. Can I get monthly income directly from government bonds?
Yes. Schemes like POMIS and some PSU bonds provide monthly payouts.
3. Are monthly income NCDs safe?
They are relatively safe when issued by financially strong companies with high credit ratings and when they are secured NCDs.
4. What is the typical return from monthly income bonds?
Government bonds: 6–8%
Corporate NCDs: 8–11.5%
MIPs: Market-dependent
5. Are monthly interest payouts guaranteed?
Yes, for government bonds and corporate NCDs.
No, for mutual fund MIPs.
6. Are these bonds better than FDs?
NCDs generally offer higher returns and are tradable. FDs offer faster liquidity and no market risk.
7. Can NRIs invest in monthly income bonds?
Most NCDs do not allow NRIs to invest. Some government schemes may allow it.
8. How are monthly interest payments taxed?
Interest income is taxed as per your income slab under “Income from Other Sources.”
9. Can monthly income bonds support retirement planning?
Yes. They are ideal for creating stable post-retirement income.
10. What should I check before buying a monthly income bond?
Credit rating, maturity, yield, whether it is secured or not, liquidity, and tax implications.
Conclusion: Build Consistent Monthly Income with Confidence
Monthly Income Bonds are an excellent tool for generating predictable, stable income. Whether you are planning for retirement or looking to build consistent cash flow, these bonds offer a balanced combination of safety and returns.
At BondsAdda, we help you discover the best monthly income bonds and NCDs, compare yields and ratings, and invest with confidence through expert-backed insights. Begin your journey toward stable monthly income today.