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The court allowed bail for Raju, 57, his brother B. Rama Raju and the company's former internal auditor Srinivas Vadlamani.
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The men are being tried for fraud in the case dubbed "India's Enron" after the US energy giant that collapsed in 2001 in the wake of huge false-accounting revelations.
Supreme Court Justice D. Bhandari ordered the three men who have been in prison in the southern city of Hyderabad for nearly three years to relinquish their passports.
The top court said bail was appropriate given "the totality of the circumstances" and told each man to post surety of 400,000 rupees ($8,000).
The court had earlier said the men could seek bail if their trial was not completed within a deadline set by the court of July 2011.
The trial in Hyderabad, capital of Andhra Pradesh state, is ongoing.
India's Central Bureau of Investigation had opposed bail, saying there was "every possibility" the accused would seek to "tamper with evidence."
Ramalinga Raju's declaration in e