Guide · Bonds and fixed income · Updated 2026-09-23

Accrued interest is a count of days, and India's debt markets do not all count them the same way

A coupon is paid in full to whoever is on the register on a fixed date, however recently they bought. Accrued interest is the correction that makes this fair to the seller, and it is only as right as the calendar it is computed on. Indian debt markets use more than one. This page checks each against the rule book or the RBI's own published numbers, prices the error of using the wrong one, and then turns to the date that decides who is paid at all.

How a quoted price becomes a settlement amount on one government bond, and why the exchange's government bond prices already include the interest, is covered in the guide to bond price and yield. The subject here is the convention itself, across instruments.

Accrued interest is the seller's coupon, not a fee

The RBI's primer on the government securities market, dated 1 April 2020, defines accrued interest (question 22) as the interest for the broken period from the last coupon date to the day before settlement. The seller held the bond for those days and is entitled to the coupon for them. The buyer pays that amount on top of the agreed price and receives it back inside the next coupon, which arrives in full. Neither side gains; the payment moves interest to the person who earned it.

The arithmetic is one line: face value, times the coupon rate, times the days counted, divided by the days in the year counted. The coupon rate is the only term the bond itself fixes. The other three are conventions: which days count, how long a year is, and on which date the holder of the next coupon is fixed. A wrong day count misstates the settlement amount by a little on most days. A wrong record date misstates it by a whole coupon at once.

Every function behind this page was first run on the primer's worked example: an 8.83 per cent bond last paid on 25 November 2013, settling on 30 January 2014 at a clean price of 100.50. It returns the primer's 65 days, ₹1.5943 of interest per ₹100 and a consideration of ₹5,10,47,150 on ₹5 crore of face value.

One calendar, four ways to count it

30/360 treats every month as 30 days and every year as 360. The primer (question 25) gives it as the bond market convention in India. Two versions circulate. The European one counts a 31st as the 30th at either end of the period. The US one keeps an end date on the 31st whenever the period began before the 30th, so it counts one day more on those dates. The difference is practical: spreadsheet bond functions default to the US version, basis 0, while the primer's own spreadsheet method for a bond's yield (Box III, under question 24) specifies basis 4, which spreadsheets define as the European 30/360.

Actual/365 takes the real number of days over a year of 365. The primer names it the money market convention, and it is how the RBI states treasury bill yields.

Actual/actual has two meanings that give different numbers. SEBI's version, for listed debt securities, divides the real days by 365, or by 366 for the whole of any coupon year that contains a 29 February. The version most bond calculators built for other markets implement, the ICMA rule, divides the real days by the real days in the current coupon period and multiplies by that period's coupon. Under SEBI's rule a half-yearly coupon depends on how long the half year is. Under ICMA's rule and under 30/360 it is always half the annual rate, but the accrual inside the period runs on different clocks.

Which instrument counts which way, verified

State development loans. The primer describes state bonds as dated securities auctioned like the central government's, with interest paid half-yearly, but it does not state their day count in terms. The RBI's auction results settle it. Each full result prints, for every re-issued state bond, the cut-off price and the cut-off yield to four decimals, and the auction notice fixes settlement on the next working day. Priced under each candidate count, the European 30/360 returns the RBI's printed yield in all 42 re-issues across the auctions of 11 August, 15 September and 22 September 2026, covering 17 states; ICMA actual/actual returns 39, and actual/365 returns none.

That the first two nearly tie is itself instructive. A re-issue usually settles within weeks or a few months of the last coupon, where the two counts differ by a day or two and a yield barely notices. The widest case in the set settled 154 calendar days after its last coupon, 151 days on 30/360. On ₹1 crore of face value that is ₹739 of accrued interest between the two near-tied counts and ₹1,892 between 30/360 and actual/365: amounts a yield printed to four decimals can only just see, and a settlement amount cannot ignore.

Treasury bills pay no coupon, so there is no interest to apportion. The day count enters only the yield: the RBI prints a money market yield on actual/365, which the guide to treasury bill yields reproduces for every bill in nine auctions. A bill yield and a bond yield sit on different bases before any comparison.

Overnight money follows the money market count exactly. The exchange's overnight rate index, built on the tri-party repo rate, adds the day's annual rate divided by 365, and over a weekend or holiday applies the rate for the number of days to the next working day (methodology dated August 2022). It is the cleanest instrument there is for seeing a day count, and it is measured below.

Listed corporate bonds follow SEBI's actual/actual. Chapter III of the master circular for non-convertible securities, issued on 15 October 2025, requires the offer document to show cash flows on that count; pays a coupon falling on a Sunday or holiday on the next working day, without moving the schedule or paying interest for the extra days; pays a maturity falling on a holiday on the previous working day; and applies 366 days to the whole of a year containing 29 February, whatever the payment frequency. The rules date from SEBI's circular of 11 November 2016, for issues from 1 January 2017, so for an older bond the offer document is the authority. Government bonds share the holiday rules (primer, paragraph 1.5).

The same bond, five answers in rupees

Take a bond with a 7.30 per cent coupon paid on 15 January and 15 July, maturing in 2036: the terms are constructed, the dates are real. On ₹1 crore of face value one day of 30/360 interest is ₹2,027.78. The table prices the accrued interest on six settlement dates under each count.

Read across a row and the problem is plain. On 31 December 2026 the correct 30/360 figure is ₹3,34,583; the spreadsheet's US default adds a day, actual/365 adds ₹3,417, ICMA ₹661. Two months later the sign flips: on 1 March 2027, 30/360 has counted February as thirty days and sits ₹3,278 above actual/365. Priced on every settlement date for a year, actual/365 strays from −₹4,083 to +₹3,417 per crore and ICMA from −₹2,857 to +₹1,984; the US method is right on every settlement date except the seven that fall on a 31st, where it is one day, ₹2,028, too high.

The same terms under SEBI's rules do not even pay equal coupons. The half year from 15 July 2026 to 15 January 2027 has 184 days and pays ₹3,68,000 per crore; the half from 15 January to 15 July 2027 has 181 and pays ₹3,62,000. On 30/360 both pay ₹3,65,000. A model that assumes equal halves for a corporate bond misstates each coupon by ₹3,000 per crore, in alternating directions, for the life of the bond.

The leap year rule is the smallest of these effects and among the easiest to code wrongly. On the SEBI illustration's own bond, ₹10 lakh at 8.95 per cent paid annually on 14 December, a purchase settling 100 days into the coupon year that ends in December 2024 carries ₹24,453.55 of accrued interest on 366 days and ₹24,520.55 on 365, ₹67.00 apart. A full coupon computed on 365 would be ₹89,745.21 against the ₹89,500 the circular prints.

The record date comes first, and it is not the same date for every bond

Accrued interest assumes the buyer will receive the next coupon. Whether that happens is decided by another date. The issuer pays whoever the register shows on the record date, and a purchase counts only once it has settled, so the last purchase that receives the coupon is the one that settles on the record date. Under next-day settlement that is a trade made the session before; a trade made on the record date itself settles too late. The guide to record dates and ex-dates under T+1 works this through for shares. Bonds follow the same logic with different record dates.

Government bonds: one day. The primer (question 17) defines the shut period as the time a security cannot be traded, so that ownership cannot change while a payment on it is finalised (it names redemption), and puts it at one day for securities held in SGL accounts. An industry association's published answer to the same question still says three working days for demat holdings. The exchange's corporate action list shows what the record dates have actually been. It carries 454 government bond interest payments from January 2022 to September 2026, on 132 bonds; 355 belong to bonds on the RBI's list of securities outstanding on 22 September 2026, which gives each maturity and so each coupon date. In 328 the record date falls one to ten days before a scheduled coupon; the other 27 do not fit the schedule and are set aside.

Since January 2023 the record date has been the day before the coupon in 184 of 242 payments, and in 227 it is the day before the coupon moved back past any Sunday or second or fourth Saturday; most of the rest step back over a public holiday. The ex-date moved with the settlement cycle. Up to 18 January 2023 it sat a session before the record date, the T+2 pattern; from 1 February 2023 it is the record date itself, or the last session before a record date on which the market does not trade, in 236 of 237 payments. The second half of 2022 was different again: the record date sat a median of six days before the coupon, and six days or more in 37 of 51 payments. No rule found for this page explains that window, which is a reason to read each payment's notice rather than assume the gap.

Listed corporate bonds: fifteen days, for all of them since July 2024. An amendment to the SEBI regulations for non-convertible securities, notified on 10 July 2024, inserted regulation 23(7): the issuer fixes a record date for interest, dividend or redemption, and it falls fifteen days before the due date. The exchange's circular NSE/CML/2024/37 of 10 September 2024 confirms that it applies to every listed and proposed non-convertible security, which made the gap uniform across issuers.

Inside the window, accrued interest is negative

A buyer who settles after the record date and before the coupon owns the bond on the payment date and is not paid: the seller, still on the register, receives the full coupon, including interest for days after the sale. A price fair to both sides must therefore run the accrual the other way, subtracting the interest for the days from settlement to the due date instead of adding the interest since the last coupon. That subtraction is negative accrued interest. It follows from the record date by arithmetic, not by custom.

Take a listed bond paying 8.00 per cent annually on 15 October and maturing in 2029, valued at a constant 7.50 per cent so that nothing moves but the calendar. Its record date for the 2026 coupon is 30 September.

Settled on 30 September, the buyer is on the record and pays ₹1,08,957 for ₹1 lakh of face value, of which ₹7,671 is accrued interest. Settled a day later, the buyer is not, and pays ₹1,01,001: ₹7,956 less, very nearly the coupon, with accrued interest of −₹307. The clean price barely moves, by ₹22, the discount on a coupon paid a fortnight later to someone else. A buyer in the window who adds ordinary accrued interest pays ₹8,000 too much wherever in the window the purchase settles, because the days since the last coupon and the days to the next always add up to the whole year.

A government bond has no such window in practice. Its record date is the day before the coupon, so the only settlement date off the record is the coupon date itself, where accrued interest is zero on any count. Its price on the exchange simply drops by about the half-yearly coupon on the session whose trades settle on the coupon date, which the guide to bond price and yield measured on the most traded bond. The habit that works for a government bond, expecting the coupon to stay in the price until the day before, is the one that costs a full coupon on a corporate bond.

The exchange's own indices count the days differently

A day count leaves a fingerprint in any index that accrues interest daily. An index counting calendar days rises on the 31st and adds one day of interest across the end of February; one counting 30/360 adds nothing on the 31st and two or three days across February. The guide to bond price and yield found the government bond fingerprint in the benchmark ten year index: nothing on the 31st, a median of 0.04 basis points below zero over 41 sessions, and about three days across the end of February, 5.56 basis points against 1.88 on an ordinary weekday. The exchange's other interest-bearing indices show a different one.

The overnight rate index counts calendar days, exactly as its methodology says. Across 2,522 steps from 23 June 2016 to 18 September 2026, the 48 steps whose own change column disagrees with the two closes are left out, nine of them starting on a weekend special session. Each remaining step is divided by the median of the twenty ordinary one-day steps before it, so that a change in the overnight rate is not mistaken for a change in the count.

The public sector bond index for April 2025 counts calendar days too. In its last weeks before maturity its daily moves were almost pure interest, and across 59 consecutive sessions from 16 January to 15 April 2025 a fit on calendar days leaves a typical error of 0.51 basis points against 0.85 on 30/360 days. The three sessions where the two counts disagree decide it.

Its change column has the quirk the guide to bond price and yield found in the government total return index: after a weekend it reports about one day's interest, measured from a value computed for the Sunday, because the index is computed every calendar day. Three indices from one provider, two counts: 30/360 for the government bond, calendar days for overnight money and for public sector bonds. Each follows its instrument, and a daily comparison across them reads the day count as performance on every 31st and every end of February.

Where the count goes wrong without anyone noticing

A spreadsheet left on its default. Bond functions default to the US 30/360 basis. On a government bond that is a day's interest too much for every settlement on a 31st after a coupon earlier in the month, ₹2,028 per crore at 7.30 per cent. The primer's own instruction is basis 4.

A calculator built for another market. ICMA actual/actual is the international default and neither Indian convention: −₹2,857 to +₹1,984 per crore against 30/360 on the example bond, and equal half-year coupons where SEBI's rule makes them unequal.

The money market count on a bond. Actual/365 is right for bills and overnight money and wrong for a dated government bond, by up to two days' interest either way. On the RBI's own state bond auctions it misses every printed yield.

The government bond habit on a corporate bond. With a record date fifteen days out, a purchase settling in the last fortnight before the due date is not paid the coupon, and adding ordinary accrued interest there overpays by one coupon.

A negotiated field taken on trust. On the exchange's request for quote platform for corporate bonds, the price, yield and accrued interest its calculator proposes are indicative, and either party can overwrite them before concluding the deal, says the exchange's user guide. The figure on the deal is what the parties agreed, so a buyer should be able to recompute it.

A clean quote compared with a dirty one. Government bonds trade in the exchange's cash segment at a price that includes accrued interest and on the RBI's order matching system at a price that does not. Comparing the two without converting reads the interest as a premium.

What the convention is for

A day count is a term of the contract, not an approximation of the calendar. Each one is exact for the instrument that specifies it. The differences between them are small on any one day and systematic across a year, which is the awkward combination: too small to notice on a screen, large enough to matter on a book measured in crores or on every coupon of a corporate bond. The record date is the opposite, rare and large. The discipline that covers both is short: name the instrument's convention before computing anything, recompute the accrued interest on a trade instead of accepting the figure a screen proposes, and check the record date before buying within a fortnight of a coupon. Treating conventions as arithmetic that can be rebuilt from the rule book, rather than as settings on a calculator, is how fixed income is taught here.