How to invest in debt funds?
03 May 2021

How to invest in debt funds?

Explore the different ways of investing in a debt fund

TLDR Points

  • Debt mutual funds are comparatively less risky than equity mutual funds because of their asset composition.
  • The securities are primarily fixed income and are unaffected by market volatilities.
  • Investing in debt funds via the digibank app is paperless and quick.
  • Download the digibank app and register.
  • Follow steps to complete your Aadhar and biometric verification.
  • Choose 'Mutual Funds' from the Investments menu.
  • Start investing!


Many investors are looking at debt funds because they are a popular financial planning and investment option. The idea of having a steady secondary income, building a wealth reserve for emergencies, or even saving up for future goals is appealing. Debt mutual funds invest in relatively stable assets such as government securities, commercial paper, corporate bonds, certificate of deposits, T-bills, and other such money market instruments.

This article will explore the benefits of debt funds and walk you through the process of investing in them.

Benefits of debt funds

Want to invest your surplus money but don't have the appetite for market risks? Or want to invest but worried about needing cash urgently? Let's look at each benefit in details:

Less Risky

Investment in these types of mutual funds is great for those with a low-risk appetite. There may be risks associated with credit-rating downgrades,  but these funds are safe from market volatilities. To protect yourself from credit risks, you can choose schemes rated five stars, which means they are the best.

Easy to Estimate Returns

As an investor, you will be able to estimate how much debt fund returns you will receive on maturity.

High Liquidity

Debt funds are extremely liquid, making it easy for you to get your hands on cash if needed urgently. You can redeem a part of your portfolio depending on the amount you require. We do recommend you take note of the exit load or cost of redemption.

How to invest in debt funds in India?

You can invest in short-term, mid-term or long-term debt funds. You will first need to be KYC compliant. The Securities and Exchange Board of India mandates that every mutual fund investor submit their Know-Your-Customer documents to prevent fraudulent practices. Follow these steps to become KYC compliant:

  1. Apply for an e-KYC verification on your chosen bank, fund house or asset management company's website.
  2. Fill in the details such as your full name, contact number, email ID.
  3. Upload the scanned documents (PAN, identity proof, and address proof) when prompted.
  4. Complete the verification process.
  5. Provide a digital signature for the final processing.

Once this simple process is done and you are KYC compliant, you can initiate investing in debt funds. Your bank may even help you complete the mutual funds KYC process.

How to Invest in Debt Funds through an app like digibank

Step 1: Download your bank or AMCs app on your smartphone.

Step 2: Register and create your login ID and password.

Step 3: Complete online and biometric verifications.

Step 4: Choose 'Mutual Funds' from the investments menu and start investing!

How to invest in debt funds offline

The offline process requires you to visit a brokerage house or bank branch. You will also have to carry your documents (original and copies) with you. If you are looking at a quicker and more seamless process, your bank or AMCs app is the best way to begin.


Build your way towards not just financial security but overall well-being with the stability of debt funds.

Download digibank and start the simple process of investing in debt funds.