A coupon rate refers to the annual interest rate an issuer pays to the holder; this rate, in turn, is a percentage of the face value of the bond. For example, you could purchase a 10-year bond with a face value of ₹1,000 and a coupon rate of 5%. Each year, the bond will pay you ₹50, which is 5% of its face value, until it matures in a decade. These payments are usually made on a fixed schedule, typically twice a year.