This paper highlights the challenges of subjectivity, delay, and inconsistency in bail decisions in Indian courts and proposes the Indian Bail Prediction System (IBPS). IBPS is an AI-based framework that predicts bail decisions based solely on factual case attributes and legal provisions and generates legally sound rationales. We construct a dataset of over 150,000 high court bail decisions and add structural annotations, including age, health status, criminal history, offense type, detention period, legal provisions, and reasons for the decisions. We fine-tune a large-scale language model using parameter-efficient techniques and evaluate its performance in various configurations, including with and without legal provisions and using Retrieval Augmented Generation (RAG). We demonstrate that the model fine-tuned using legal knowledge achieves significantly better accuracy and explanation quality than the baseline model and generalizes well even on a test set independently annotated by legal experts. IBPS offers a transparent, scalable, and reproducible solution that provides data-driven legal assistance, reduces bail delays, and promotes procedural fairness in the Indian judicial system.