SEBI’s calls for ‘Bond’ing over bonds, launches pan India outreach program to promoter corporate bonds

SEBI’s calls for ‘Bond’ing, launches pan India outreach program to promoter corporate bonds

• SEBI launched a pan-India outreach to boost corporate bond market participation
• SEBI chairman: India needs deeper debt markets, not just bank credit, for growth.
• Corporate bonds make up just 16% of India's GDP, lagging behind other countries.

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Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Wednesday launched a pan-India outreach programme aimed at expanding participation in the corporate bond market, saying India’s growth ambitions cannot be financed by bank credit alone and require a deeper, more liquid debt market.

Addressing the inaugural Pan-India Outreach Program for Corporate Bonds, Pandey said the initiative is intended as a listening exercise to understand why many capable issuers continue to stay away from the bond markets and what changes are required to make the route more efficient and predictable.

He said India’s journey towards Viksit Bharat will require capital markets to play a leading role in financing infrastructure development, the green transition, manufacturing expansion and services growth, as bank credit alone will not be sufficient. Pandey said, “The growth we are aiming for cannot be financed by bank credit alone.”

Pandey said issuer participation in the debt market remains limited. While more than 5,600 companies are listed on equity markets, only about 770 entities have raised funds through the corporate bond market. Of these, just 272 issuers have accessed the bond market repeatedly.

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Investor participation has increased significantly, with the number of unique investors rising from 43 million in FY20 to 139 million. However, awareness of corporate bonds as an investment product remains low at around 10 percent, substantially below deposits, insurance and small savings schemes.

The SEBI chairman said the corporate bond market is heavily skewed towards highly rated issuers, which account for 85–90 percent of total issuances, while around 60 percent of funds raised are by financial institutions. Secondary market liquidity remains shallow due to buy-and-hold strategies of institutional investors and the dominance of private placements, with retail participation remaining minimal compared to equity.

Highlighting the growing importance of debt markets, Pandey said issuers raised about Rs 10 trillion through corporate debt issuances in FY25 and around Rs 6.8 trillion between April and December 2025. Outstanding corporate bonds have grown at a compound annual growth rate of about 12 percent CAGR over the past decade, rising from about Rs 17.5 trillion in FY15 to around Rs 58 trillion as of December 2025. Outstanding corporate bonds are now equivalent to nearly 60 percent of bank credit to industry and services.

Despite this growth, corporate bonds outstanding account for only about 16 percent of India’s GDP, compared with around 79 percent in South Korea, 54 percent in Malaysia and 38 percent in China.

He said, capital market participation is rising, the number of unique investors has grown from 43

million in FY20 to 139 million today. Yet, SEBI’s Investor Survey shows awareness of corporate bonds as an investment product is only about 10 percent, well below deposits, insurance, and small savings. Even cryptocurrency has higher awareness at 15 percent.

Pandey said SEBI is seeking issuer feedback on challenges related to credit ratings, documentation, disclosures, listing processes and post-issuance compliance, as well as on factors that would encourage public issuance over private placements and improve secondary market liquidity.

Pandey said recent Union Budget proposals, including a market-making framework for corporate bonds, derivatives on corporate bond indices and total return swaps, will help improve price discovery, narrow bid-ask spreads and enhance secondary market liquidity.

As liquidity improves and the investor base widens, corporate bonds will become a more reliable and cost-effective funding route for issuers, he said.

Calling for collective action, Pandey said, “Regulation alone cannot build a market. The next phase depends on issuers, investors, intermediaries, stock exchanges, and regulators moving together”.

Pandey said “Our aim is simple: to make corporate bonds a mainstream funding option - and an investment avenue for all classes of investors - not a niche option used by a few”.

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