Which bonds pay monthly interest, and what is the catch?

Any issuer can choose to pay interest monthly; it is written into that bond's terms, so there is no category of "monthly bonds" to buy, only individual bonds with a monthly coupon. To find them, filter by coupon or payout frequency. SEBI's minimum disclosures for each bond on a registered platform include coupon type, rate and frequency (SEBI NCS Master Circular), Groww's bond section filters by payout frequency (Groww), and its bond IPO listings show payout frequency next to the rating (Groww). This page does not recommend any bond.

Why are monthly payers marketed so heavily?

Because regular income is what many retail investors ask for. Google autocomplete for "bonds for" suggests monthly income and senior citizens (Google autocomplete), and the TradingQnA thread on NCD monthly interest payouts has 1,459 views (TradingQnA). A Reddit thread from Jul 2026 asks why corporate bonds on Groww offering 11% with a monthly payout are not more popular (Reddit). Payout frequency and yield are separate choices by the issuer, and the yield reflects the issuer's credit, not the frequency.

What is the catch?

1. Frequency is not safety. A monthly coupon from a BBB issuer carries the same credit risk as an annual one. Check the lowest rating on the Credit Risk-o-Meter and the bond's seniority.
2. Some monthly payers also return principal. One BondScanner listing on 17th Oct 2026 combined monthly interest with partial redemption (BondScanner). Each payout then includes part of your principal, the outstanding amount shrinks, and the rupee interest falls with it. On the most viewed platform thread on TradingQnA, a reply notes that such bonds can show a high yield while absolute returns are modest (TradingQnA).
3. The yield looks higher on paper. Paid monthly, a 12% coupon works out to about 12.68% a year if every payment is reinvested at 12%, because (1.01)^12 is about 1.1268. In practice small monthly amounts rarely get reinvested at the same rate.
4. TDS on every payment. Issuers deduct 10% TDS on interest from listed debentures since 1st Apr 2023 (EY), so a ₹1,000 monthly coupon arrives as ₹900 and you claim the rest back or settle it in your return.
5. A record date every month. The holder on each record date gets that month's coupon. Stable Bonds' terms say its sell feature can be disabled near a record date (Stable T&C).

How do I compare a monthly bond with a quarterly or annual one?

Compare YTM on the same basis, and add up the rupees you will actually receive, separating interest from returned principal. See If the coupon is 9%, do I earn 9%? for how coupon, price and yield relate.