What It Means
A zero-coupon bond is a bond that pays no periodic interest at all. Instead, it's sold at a discount to its face value and redeemed at full face value when it matures — the discount itself is the investor's entire return.
Example
A zero-coupon bond with a ₹1,00,000 face value maturing in 5 years might be sold today for ₹68,000. The investor pays ₹68,000 upfront, receives no interest payments over the 5 years, and collects the full ₹1,00,000 at maturity — the ₹32,000 gap is the return, effectively compounding over the holding period even though no cash changes hands until the end.