SEBI Chief: Capital markets, not just banks, must fuel India's growth

SEBI Chairman Tuhin Kanta Pandey stated that capital markets must lead India's growth as bank credit is insufficient. He highlighted the need for a strong bond market to fund infrastructure and manufacturing, despite its current underutilisation.

Talking about the India's underutilised bond markets, SEBI Chairman, Tuhin Kanta Pandey, Chairman, SEBI said, "capital markets must lead this growth, as bank credit alone is insufficient."

Speaking at the 'The inaugural Pan- India Outreach Program for Corporate Bonds', an event by SEBI, the Chairman pointed out the need for a strong banking system complemented by a clean, liquid, and trusted capital market to fund infrastructure, green transition, manufacturing, and services. He further noted, "India is among the fastest-growing major economies, with quarterly GDP growth averaging 7.8% over the past three years and estimated 7.4% for FY26."

Corporate Bond Market Growth

Highlighting India's Corporate bond market, he highlighted, "In FY25, issuers raised ~10 trillion rupees through debt issuances. Between April and December 25, ~6.8 trillion rupees were raised. Outstanding corporate bonds grew at ~12% CAGR over the last decade, from 17.5 trillion in FY15 to 58 trillion (58 lakh) by December 2025. This amounts to ~60% of bank credit to industry and services."

Challenges Facing the Corporate Bond Market

Talking about the current bond market condition he highlighted, "Corporate bonds outstanding are only ~16% of GDP, significantly lower than South Korea (79%), Malaysia (54%), and China (38%). The issuer base also remains narrow with over 5600 companies listed in equity, but only 770 entities have raised funds via the debt market. Only 272 of these have issued debt multiple times.

He further spoke about low awareness among the investors. He pointed out that the SEBI's investor survey shows only 10 per cent awareness of corporate bonds as an investment product, lower than deposits, insurance, small savings, and even cryptocurrency (15 per cent).

Benefits of a Developed Corporate Bond Market

He concluded his speech by highlighting the benefits of a 'Developed Corporate Bond Market. He noted, "It provides an alternative to bank borrowing, especially for long-term funding. Diversifies risks beyond the banking system and can help reduce the cost of capital for corporates. (ANI)

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