Coupon / Interest rate is the rate stated on the Bond/NCD expressed as a percentage of the principal. The coupon rate helps to derive the actual return generated in the security i.e. coupon/interest payment

Illustration of a fixed Coupon/ interest bearing Bond/ NCD:

Face Value: Rs.10,000

Issue price: Rs.10,000

Coupon / Interest rate: 7% p.a.

Coupon / Interest per annum on an investment of Rs. 10,000 in this bond: Rs.700