Sebi Chairman Tuhin Kanta Pandey Highlights Four Major Gaps In Corporate Bond Market

Securities and Exchange Board of India (Sebi) Chairman, Tuhin Kanta Pandey, addressed a gathering at the CareEdge Debt Summit on May 26, 2026. In his address, Pandey talked about the growth of the Indian corporate bond market.

He mentioned that outstanding corporate bonds have expanded significantly, rising from approximately Rs 17.5 trillion at the conclusion of FY15 to over Rs 59 trillion in FY26, growing with a compound annual growth rate of roughly 12 per cent.  He also said that during FY26, Rs 9.1 trillion were mobilised through debt issuance, an amount which is nearly double the capital raised through equity markets in the same period.

Four Major Gaps in the Corporate Debt Market

Pandey added that despite these figures, scale alone is insufficient for the growth of India’s corporate debt market and highlighted four gaps which are currently restricting the market.

Narrowed Investor Choice

Pandey mentioned in his address that the first major gap in the corporate debt market is related to the market’s heavy concentration in credit ratings and sectoral participation. He added that the concentration limits the options available for investors looking to allocate capital.

"Nearly 85-90 per cent of bond issuances are rated AAA or AA, while around 70 per cent of outstanding bonds come from financial sector entities. This narrows investor choice. The primary market also remains dominated by private placements," Pandey said.

Low Participation of Corporate Issuers

Pandey highlighted that the number of participating corporate issuers in the debt market is low when compared to the broader equity market. In his speech, he noted that while around 6,000 companies maintain listings on the National Stock Exchange and Bombay Stock Exchange, only 776 of them have listed debt instruments. Thus, in order to build a resilient corporate ecosystem, more firms must view the debt avenue as a source of long-term capital.

Lack of Secondary Market Activity

Pandey said that the third systemic gap in the corporate debt market is the lack of secondary market activity in the bond market, which affects price discovery and curbs the entry of fresh capital. He added that while a steady base of long-term buyers offers structural stability, a lack of active trading creates distinct hurdles.

"But when bonds rarely trade, volumes stay thin, price discovery weakens, exits become difficult, and new investors hesitate," Pandey said.Low

Involvement of Retail Investors

Pandey added that the issue of low liquidity in the bond market is further compounded by the minimal involvement of individual retail investors in fixed-income products compared to their adoption of equities and mutual funds.

“Sebi’s Investor Survey shows corporate bond awareness at only 10 per cent, with household penetration at less than 1 per cent. This gap must be addressed through simpler access, better disclosures, and stronger fixed-income literacy," Pandey said.

Sebi’s Measures To Widen Market Access

Pandey added that Sebi is actively looking at addressing gaps in the bond market and has implemented several measures aimed at increasing market access and enhancing structural transparency.

Notably, the regulator has lowered minimum investment thresholds to encourage more participants, regulated Online Bond Platform Providers to make digital access safer, and expanded the Electronic Book Provider framework to enhance price discovery.

Pandey added that looking ahead, Sebi is collaborating with the Reserve Bank of India and the Ministry of Finance to develop a robust market-making framework. Other steps which Sebi intends to take include developing dedicated bond Exchange Traded Funds (ETFs) and index derivatives to help institutions in hedging interest rate risks. The regulator also plans to create a regulatory classification for debt brokers to reduce entry barriers and execute a nationwide awareness campaign under Project Jagrook.

Additionally, Sebi also intends to review listing regulations for debt-only entities, launch issuer outreach programs focusing on small and medium (SME) businesses and explore a pilot program for the tokenisation of corporate bonds.