{"id":61589,"date":"2025-12-13T19:00:30","date_gmt":"2025-12-13T13:30:30","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=61589"},"modified":"2025-12-15T15:06:58","modified_gmt":"2025-12-15T09:36:58","slug":"niti-aayog-corporate-bond-market-report","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/13-12-2025\/niti-aayog-corporate-bond-market-report","title":{"rendered":"NITI Aayog Releases Report on \u201cDeepening the Corporate Bond Market in India\u201d"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>NITI Aayog has released the report titled <strong>\u201cDeepening the Corporate Bond Market in India&#8221;.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The report examines <\/strong>the current state, challenges, and future roadmap for strengthening India\u2019s corporate bond market\u2014a key financing avenue for corporations, infrastructure, MSMEs, and emerging sectors.\n<ul class=\"wp-block-list\">\n<li><strong>A deep and liquid corporate bond market <\/strong>helps mobilise long-term capital, reducing over-reliance on bank credit and supporting economic growth.<\/li>\n\n\n\n<li><strong>It is critical for<\/strong> financing infrastructure, climate actions, MSMEs, and emerging sectors aligned with Viksit Bharat 2047 goals.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is a Corporate Bond?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Corporate bonds are <strong>debt securities<\/strong> issued by<strong> private and public corporations.<\/strong>\u00a0<\/li>\n\n\n\n<li><strong>Companies issue corporate bonds<\/strong> to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business.\u00a0<\/li>\n\n\n\n<li><strong>When one buys a corporate bond<\/strong>, one lends money to the <strong>&#8220;issuer,&#8221;<\/strong> the company that issued the bond.\u00a0<\/li>\n\n\n\n<li>In exchange, the company promises to return the money, also known as <strong>&#8220;principal,&#8221; on<\/strong> a specified maturity date. Until that date, the company usually pays you a stated<strong> rate of interest,<\/strong> generally semiannually.\u00a0<\/li>\n\n\n\n<li>While a corporate bond gives an <strong>IOU (I owe you) from the company,<\/strong> it does not have an <strong>ownership interest<\/strong> in the issuing company, unlike when one purchases the company&#8217;s equity stock.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Highlights of the Report<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Growth and Current Status: <\/strong>Outstanding corporate bonds rose from \u20b917.5 trillion (FY2015) to \u20b953.6 trillion (FY2025), growing at ~12% annually.\n<ul class=\"wp-block-list\">\n<li>Market size is 15\u201316% of GDP, improved but still below peers like South Korea, Malaysia and China.<\/li>\n\n\n\n<li>Corporate bond fundraising is now approaching bank credit levels, signalling a gradual shift to market-based financing.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"e8dac5\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"397\" height=\"334\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/12\/image-87.png\" alt=\"\" class=\"not-transparent wp-image-61590\" style=\"--dominant-color: #e8dac5; width:325px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/12\/image-87.png 397w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/12\/image-87-300x252.png 300w\" sizes=\"auto, (max-width: 397px) 100vw, 397px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Strategic Importance: <\/strong>A deep corporate bond market is indispensable for a $30 trillion economy by 2047, enabling mobilisation of long-term, low-cost capital for infrastructure, industry, climate action and emerging sectors.\n<ul class=\"wp-block-list\">\n<li>It complements banks, reduces systemic concentration risks, strengthens monetary transmission, and supports a resilient financial architecture.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>The report forecasts <\/strong>that India&#8217;s corporate bond market has the potential to exceed \u20b9100\u2013120 trillion by 2030 (approximately $1.3\u20131.4 trillion), provided deeper structural reforms and institutional capacity-building are undertaken.<\/li>\n\n\n\n<li><strong>Equity vs. Bond Market Imbalance: <\/strong>India\u2019 s equity market is valued at USD 4.8 trillion while the bond market is valued at USD 642 billion.\n<ul class=\"wp-block-list\">\n<li>Equity markets are nearly 7 times larger than bond markets, indicating significant imbalance<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Structural Limitations:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Issuer concentration: <\/strong>Dominated by top-rated corporates; limited MSME participation.<\/li>\n\n\n\n<li><strong>Investor concentration:<\/strong> Heavy reliance on institutional investors; low retail and FPI participation.<\/li>\n\n\n\n<li><strong>Market structure: <\/strong>Private placements dominate; secondary market liquidity is shallow.<\/li>\n\n\n\n<li><strong>Regulatory frictions:<\/strong> Overlapping regulators, high compliance costs, procedural delays.<\/li>\n\n\n\n<li><strong>Investment constraints: <\/strong>Insurance and pension funds face limits on lower-rated securities.<\/li>\n\n\n\n<li><strong>Weak enablers: <\/strong>Inefficient debt recovery, tax asymmetries, high transaction costs.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Economic Benefits of a Deep Bond Market:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Channels institutional and household savings into productive investment.<\/li>\n\n\n\n<li>Supports development of risk management tools.<\/li>\n\n\n\n<li>Provides stable financing for infrastructure, green transition, MSMEs and innovation-led sectors.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Global Experience &amp; Lessons: <\/strong>Countries like US, South Korea, Singapore and Thailand show success through:\n<ul class=\"wp-block-list\">\n<li>coherent and unified regulation;<\/li>\n\n\n\n<li>strong market infrastructure;<\/li>\n\n\n\n<li>active market-making and deep secondary markets;<\/li>\n\n\n\n<li>streamlined disclosures and credit enhancement mechanisms.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>These features enhance liquidity, investor diversity and financing depth.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Reforms Undertaken in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>SEBI: <\/strong>SEBI has introduced <strong>electronic trading <\/strong>through the <strong>Request for Quote (RFQ)<\/strong> platform, facilitated retail access through online bond platforms, strengthened governance standards for credit rating agencies and debenture trustees, and simplified issuance norms.\u00a0<\/li>\n\n\n\n<li><strong>RBI:<\/strong> The RBI has enhanced settlement architecture, introduced tri-party repos and credit default swaps, and supported the development of repo and clearing mechanisms.\u00a0<\/li>\n\n\n\n<li><strong>Government:<\/strong> Additionally, the Government has promoted Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), and green finance initiatives to encourage long-term investment and deepen capital markets.\u00a0<\/li>\n\n\n\n<li>Collectively, these reforms have laid a strong foundation for a <strong>more transparent, accessible, and technology-driven bond market ecosystem.\u00a0<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Reform Roadmap (Phased Approach)<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Short-term priorities: <\/strong>Streamline regulations and improve inter-regulatory coordination.\n<ul class=\"wp-block-list\">\n<li>Strengthen market infrastructure and digital access.<\/li>\n\n\n\n<li>Simplify issuance for wider issuer participation.<\/li>\n\n\n\n<li>Build confidence via quick wins and early liquidity improvements.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Medium to Long-term priorities: <\/strong>Unified regulatory architecture and stronger resolution mechanisms.\n<ul class=\"wp-block-list\">\n<li>Deeper secondary markets with active market-making and repo facilities.<\/li>\n\n\n\n<li>Broader issuer base (mid-sized firms, new asset classes).<\/li>\n\n\n\n<li><strong>Product innovation:<\/strong> long-tenor bonds, credit-enhanced instruments, sustainability-linked bonds.<\/li>\n\n\n\n<li>Expand investor base (insurance, pension, retail, FPIs).<\/li>\n\n\n\n<li>Leverage digital innovations (tokenised bonds, integrated data platforms).<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.pib.gov.in\/PressReleasePage.aspx?PRID=2202453&amp;reg=3&amp;lang=1\" target=\"_blank\" rel=\"noopener\"><strong>PIB<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">NITI Aayog has released the report titled \u201cDeepening the Corporate Bond Market in India&#8221;.<\/li>\n<p><\/p>\n<p><strong>About<\/strong><\/p>\n<li class=\"ms-5\">The report examines the current state, challenges, and future roadmap for strengthening India\u2019s corporate bond market\u2014a key financing avenue for corporations, infrastructure, MSMEs, and emerging sectors.<\/li>\n<li class=\"ms-5\">A deep and liquid corporate bond market helps mobilise long-term capital, reducing over-reliance on bank credit and supporting economic growth.<\/li>\n<li class=\"ms-5\">It is critical for financing infrastructure, climate actions, MSMEs, and emerging sectors aligned with Viksit Bharat 2047 goals.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/13-12-2025\/niti-aayog-corporate-bond-market-report\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-61589","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/61589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=61589"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/61589\/revisions"}],"predecessor-version":[{"id":61593,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/61589\/revisions\/61593"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=61589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=61589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=61589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}