The Securities and Exchange Board of India (SEBI) and the country’s apex bank are in discussions to strengthen trading activity in corporate bond index derivatives with an aim to bring them on par with equity trading.
SEBI whole-time member, Ananth Narayan G, said on Friday that they were hopeful that the talks with the Reserve Bank of India (RBI) would be fruitful so that bond trading could see significant growth after being upgraded in terms of settlement, platforms, and even trading culture.
Speaking at the ASSOCHAM National Council for Corporate Bonds, Narayan spointed out that secondary bond volumes are about ₹1.4 lakh crore a month, while equity markets trade around that much in a single day, which is why they wanted to make bond trading comparable with equity trading.
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On the municipal bonds front, Narayan noted that from 2017 till date, there have been only 16 issuances raising ₹3,134 crore, a mere 0.02 per cent of GDP.
"The potential here is immense, but so is the need for capacity building and investor confidence," he said.
In 2023, SEBI allowed stock exchanges to launch derivative contracts on indices of corporate debt securities rated AA+ and above, but the move failed to gain traction.
Outstanding corporate bonds have risen from ₹17.5 lakh crore at the end of FY15 to ₹53.6 lakh crore as of March 2025, a CAGR of over 12 per cent. In FY25 alone, nearly ₹10 lakh crore of corporate bonds were issued, and in FY26, issuances have already touched ₹3.5 lakh crore by July.
Despite this growth, the market remains dominated by institutional investors such as banks, insurers, provident funds, and mutual funds, while retail and foreign investors continue to remain on the fringes, Narayan added.
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