Sebi and RBI are in talks on launching corporate bond index derivatives to deepen trading in corporate debt securities.
Sebi’s Ananth Narayan noted corporate bond trading volumes stand at ₹1.4 lakh crore monthly, compared with similar turnover in equities daily.
Derivatives on corporate debt indices (AA+ and above) were allowed in 2023 but failed to gain traction.
Municipal bonds remain underdeveloped, with only 16 issuances worth ₹3,134 crore since 2017.
Securities and Exchange Board of India and the Reserve Bank of India are in discussions on corporate bond index derivatives to strengthen trading activity in corporate debt securities, Sebi whole-time member Ananth Narayan G said on Friday.
Speaking at the ASSOCHAM National Council for Corporate Bonds, Narayan said, "Corporate bond index derivatives trading is another frontier in this regard. Good discussions are ongoing between Sebi and RBI, and we are hopeful that we will see progress soon." He pointed out that secondary bond volumes are about ₹1.4 lakh crore a month, while equity markets trade around that much in a single day. If bond trading can be made more comparable to equity trading-- in terms of settlement, platforms, and even trading culture – the investment class could see significant growth, he added.
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.
On the municipal bonds front, Narayan noted that from 2017 till date, there have been just 16 issuances raising ₹3,134 crore, a mere 0.02% of GDP.
"The potential here is immense, but so is the need for capacity building and investor confidence," he said.
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%. 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.
