Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey today said corporate bonds are not risk-free, even as the market regulator plans major reforms to deepen India’s debt market and improve investor participation. Addressing the CareEdge Debt Market Summit in Mumbai, the SEBI chief said the regulator is exploring a pilot project for tokenisation of corporate bonds using blockchain-based technology to improve settlement efficiency, transparency and accessibility.
He said India’s corporate bond market has expanded significantly, with outstanding corporate bonds rising from over 17 lakh crore rupees in finacial year 2015 to over 59 lakh crore rupees in financial year 2026. Debt issuances in this fiscal mobilised over 9 lakh crore rupees, nearly double the amount raised through equity markets. However, Mr Pandey noted that challenges remain, including low retail participation, limited liquidity and concentration of issuers in a few sectors and ratings categories. He said bonds carry credit, interest-rate and liquidity risks and stressed the need for investor education and transparency.
The SEBI chairman said the regulator is working with the Reserve Bank of India and market participants to strengthen market-making mechanisms and improve secondary market liquidity. He added that SEBI is also considering a separate regulatory framework for debt brokers and reviewing compliance requirements for debt-only listed entities. Mr Pandey said SEBI will conduct outreach programmes to encourage more companies, especially SMEs, to raise funds through bond markets. The regulator is also reviewing the municipal bond framework to increase retail participation and help finance urban infrastructure projects.
