SEBI Chairman outlines a three-pronged strategy to deepen India’s corporate bond market: strengthen primary issuances, boost secondary market liquidity, and raise investor awareness.

The plan focuses on treating the corporate bond market as a key driver of capital formation and investment diversification.

The multi-pronged approach aims to deepen the corporate bond market to support capital formation and provide investment diversification.

SEBI will not implement immediate changes to derivative markets and will maintain a data-driven, status-quo approach while continuing to monitor developments.

Municipal bonds are seen as a nascent yet high-potential avenue for urban infrastructure financing, with revenues placed in escrow to protect investors and a rigorous eligibility check of issuing municipalities.

A framework for investor safeguards includes escrow revenues and clear eligibility criteria for municipalities issuing bonds.

SEBI aims to attract more foreign portfolio investors by reducing trade frictions and regulatory uncertainties, including digital document submission, simplified block deal frameworks, and a netting consultation paper.

Corporate bond market growth is substantial, with outstanding bonds rising to Rs 58 lakh crore from Rs 17 lakh crore at a 12% CAGR, and corporate bonds now fund about 60% of bank credit to industries.

SEBI emphasizes retail investor diversification and education, highlighting a large base of 138 million retail investors and the need to guide access to the bond market according to life-cycle needs and risk profiles.