India’s corporate bond market has expanded rapidly, but regulator SEBI emphasises the need for broader issuer participation, enhanced market infrastructure, and technological innovation such as tokenised bonds to make it more functional and reliable for investors and borrowers.
India’s corporate bond market has grown sharply over the past decade, but the country’s top markets regulator says size alone will not make it more useful for borrowers or investors. Speaking at the 11th J.P. Morgan India Conference on September 22, Securities and Exchange Board of India chairman Tuhin Kanta Pandey said outstanding corporate bonds had climbed to about ₹61 lakh crore from roughly ₹20 lakh crore in FY2015-16, underlining how much the market has expanded even as liquidity remains a concern.
Pandey said more than ₹4.3 lakh crore had already been raised through corporate bonds in FY2026-27, but argued that SEBI’s job is not simply to push issuance higher. Instead, he said, a healthier market needs a broader mix of issuers, clearer price discovery, deeper secondary-market trading and wider participation from investors and intermediaries. That, he suggested, is what would make corporate bonds a more dependable funding channel and not just a large one.
To that end, SEBI has spread its reforms across issuance, distribution, market infrastructure and investor education. According to the regulator, one of the most notable experiments is Demat 2.0, a pilot for tokenised corporate bonds on a private, permissioned distributed-ledger network run by depositories. The Economic Times reported that the project is designed to test how bonds can be issued, held, traded and settled more efficiently, with one version linking the system to the Reserve Bank of India’s wholesale central bank digital currency through the Unified Market Interface.
SEBI is now looking beyond the pilot phase. The regulator is working on a broader market-making framework that would cover liquidity support, infrastructure and repo access, while also consulting on Fixed Income Channel Partners to widen distribution through regulated online platforms. Another proposal, the Credit Risk-o-Meter, is meant to make credit risk easier for investors to understand. Pandey said the aim is to open the market further without weakening safeguards, so that better liquidity and stronger price discovery develop alongside broader access.
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