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SEBI Chief Urges Capital Markets to Drive Bond Growth Beyond Bank Credit

SEBI Chairman Tuhin Kanta Pandey emphasized that capital markets must lead the expansion of India's corporate bond market, as reliance solely on bank credit is inadequate. He revealed that while the corporate bond market has grown significantly, it remains a small fraction of GDP compared to other major economies. The issuer base is narrow, and investor awareness of corporate bonds as a product is critically low at just 10%. A developed bond market is crucial for providing long-term funding alternatives, diversifying risk, and reducing the cost of capital for corporations.

Key Points: SEBI Chairman: Capital Markets Must Lead Bond Market Growth

  • Corporate bonds are only ~16% of GDP
  • Outstanding bonds grew at ~12% CAGR in a decade
  • Only 10% investor awareness of corporate bonds
  • Issuer base narrow with only 770 entities raising debt
2 min read

Capital markets must lead bond market growth, as bank credit alone is insufficient: Tuhin Kanta Pandey, SEBI Chairman

SEBI Chairman Tuhin Kanta Pandey highlights India's underutilized corporate bond market, its growth, and the need for greater investor awareness.

"capital markets must lead this growth, as bank credit alone is insufficient. - Tuhin Kanta Pandey"

Mumbai, February 4

Talking about the India's underutilised bond markets, SEBI Chairman, Tuhin Kanta Pandey, Chairman, SEBI said, "capital markets must lead this growth, as bank credit alone is insufficient."

Speaking at the 'The inaugural Pan- India Outreach Program for Corporate Bonds', an event by SEBI, the Chairman pointed out the need for a strong banking system complemented by a clean, liquid, and trusted capital market to fund infrastructure, green transition, manufacturing, and services.

He further noted, "India is among the fastest-growing major economies, with quarterly GDP growth averaging 7.8% over the past three years and estimated 7.4% for FY26."

Highlighting India's Corporate bond market, he highlighted, "In FY25, issuers raised ~10 trillion rupees through debt issuances. Between April and December 25, ~6.8 trillion rupees were raised. Outstanding corporate bonds grew at ~12% CAGR over the last decade, from 17.5 trillion in FY15 to 58 trillion (58 lakh) by December 2025. This amounts to ~60% of bank credit to industry and services."

Talking about the current bond market condition he highlighted, "Corporate bonds outstanding are only ~16% of GDP, significantly lower than South Korea (79%), Malaysia (54%), and China (38%). The issuer base also remains narrow with over 5600 companies listed in equity, but only 770 entities have raised funds via the debt market. Only 272 of these have issued debt multiple times.

He further spoke about low awareness among the investors. He pointed out that the SEBI's investor survey shows only 10 per cent awareness of corporate bonds as an investment product, lower than deposits, insurance, small savings, and even cryptocurrency (15 per cent).

He concluded his speech by highlighting the benefits of a 'Developed Corporate Bond Market. He noted, "It provides an alternative to bank borrowing, especially for long-term funding. Diversifies risks beyond the banking system and can help reduce the cost of capital for corporates.

- ANI

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Reader Comments

P
Priya S
The awareness stat is shocking! Only 10% know about corporate bonds, but 15% know about crypto? 😅 It shows where the marketing and financial literacy efforts are lacking. We need simple products for common people, not just for big institutions.
R
Rohit P
Absolutely right. For 'Make in India' and green energy projects to succeed, we need long-term, stable funding. Banks can't carry that load alone. Hope SEBI simplifies the process for companies to issue bonds.
S
Sarah B
As an NRI looking to invest, I find the Indian bond market information very opaque compared to equities. If they want to attract more capital, they need better transparency and easier access for foreign and domestic retail investors alike.
V
Vikram M
The comparison with South Korea and Malaysia is an eye-opener. We have the growth, but our financial markets need to mature faster to support it. This is a call to action for regulators and investors both. Jai Hind!
K
Karthik V
With respect, while the intention is good, SEBI and the government must first ensure strict credit rating accountability and prevent defaults. People lost money in some NCDs earlier. Trust is the foundation for any market to grow.

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