CareEdge Ratings called for deeper reforms to improve accessibility and liquidity in India’s bond market, as the country seeks to mobilise long-term capital needed to achieve its “Viksit Bharat” ambition by 2047.
At the Debt Market Summit in Mumbai, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey said the market regulator was exploring a pilot for tokenisation of corporate bonds to enable faster settlement, improved traceability, automated servicing and greater transparency.
Pandey said India’s corporate debt market was becoming increasingly important as the economy expands and financing needs diversify beyond the banking system.
“A growing economy needs patient debt capital for infrastructure, capacity expansion, refinancing, and long-gestation projects,” he said, according to the company statement.
India’s outstanding corporate bonds have risen from around Rs 17.5 lakh crore at the end of FY16 to more than Rs 59 lakh crore currently, reflecting a compound annual growth rate of about 12 per cent, Pandey said.
In FY26, debt issuers mobilised roughly Rs 9.1 trillion, nearly double the amount raised through equity issuances, he added.
However, he noted that despite around 6,000 companies being listed on the National Stock Exchange and BSE, only 776 had listed debt securities, underlining the need for wider adoption of bond financing among corporates.
Pandey also highlighted low retail participation in the corporate bond market. According to a Sebi investor survey cited at the summit, awareness of corporate bonds stood at only 10 per cent, while household penetration remained below 1 per cent.
He said Sebi was working with market participants, the Reserve Bank of India and the finance ministry on a market-making framework announced in the Union Budget. The regulator is also considering a separate classification for debt brokers to lower costs and encourage specialised intermediaries in fixed-income markets.
The municipal debt framework is also under review to support pooled financing for multiple urban local bodies and encourage greater retail participation in municipal bonds, Pandey added.
According to CareEdge Ratings’ report, titled “Structural Shifts in Debt Market: Emerging Themes”, India’s bond market remains heavily dominated by government securities, with general government debt securities accounting for 55.4 per cent of gross domestic product.
While comparable with some Asian peers such as the Philippines and Indonesia, India still lags developed markets including Japan, the United States and the United Kingdom in overall debt market depth, the report said.
The report identified limited retail and foreign investor participation, lower secondary market trading volumes and underdeveloped sub-sovereign debt markets as key structural gaps.
Ashishkumar Chauhan, managing director and chief executive of National Stock Exchange, said India would need investments to rise from around 30 per cent of GDP to more than 35 per cent to meet its 2047 development goals.
“Bank credit alone cannot carry that burden, and therefore corporate bonds must play a much larger role,” Chauhan said at the event.
India’s bond market currently stands at 17.1 per cent of GDP, compared with 75.7 per cent in South Korea and 54.7 per cent in Malaysia, he said.
Corporate bonds account for 13.5 per cent of India’s domestic debt market, while average daily trading volumes in corporate bonds rose to Rs 9,168 crore in FY26 from Rs 3,180 crore in FY25, according to Chauhan.
CareEdge Ratings said continued reforms aimed at simplifying regulations, improving liquidity and widening investor participation would be essential for India to build a deeper and more resilient debt market capable of supporting large-scale investments over the coming decades. |
