What the report focuses on
Deepening India’s Corporate Bond Market: NITI Aayog released a detailed report in December 2025 on strengthening India’s Corporate Bond Market (CBM).
The report highlights the need to diversify long-term financing beyond banks, especially for infrastructure and industrial growth.
Corporate bonds are debt instruments issued by companies to raise funds for expansion, refinancing, and capital expenditure.
A deep bond market reduces stress on banks and improves overall financial stability.
Static GK fact: In India, long-term infrastructure financing has traditionally depended on banks and government institutions.
Current status of the corporate bond market
India’s corporate bond market stands at around 15–16% of GDP, which is relatively low by global standards.
In comparison, South Korea (79%), Malaysia (54%), and China (38%) have much deeper bond markets.
The market has, however, shown strong growth momentum.
Outstanding corporate bonds increased from ₹17.5 trillion in FY2015 to ₹53.6 trillion in FY2025, recording nearly 12% annual growth.
This growth reflects increasing corporate participation, but liquidity and investor depth remain limited.
Most issuances are concentrated among highly rated firms.
Static GK Tip: A mature bond market typically complements, not replaces, the banking system.
Regulatory and structural challenges
One major concern is regulatory overlap and fragmentation.
The market is governed by SEBI, RBI, and the Ministry of Corporate Affairs, leading to compliance complexity.
Another issue is extensive disclosure requirements, particularly burdensome for lower-rated or infrequent issuers.
This discourages medium-sized firms from accessing bond markets.
The Credit Rating Agency (CRA) framework also faces credibility challenges.
The issuer-pays model creates potential conflicts of interest, while high entry barriers limit competition.
Other constraints include high entry costs, information asymmetry, and a weak secondary market, resulting in low trading volumes.
Most bonds are held until maturity by institutional investors.
Static GK fact: Secondary market liquidity is a key indicator of bond market efficiency.
Three-phase reform roadmap
The report proposes a three-phase solution to deepen the market systematically.
Each phase addresses a specific layer of reform.
Phase I reforms
Phase I focuses on regulatory streamlining.
It recommends inter-agency coordination, standardized disclosure norms, and simplified issuance procedures.
These measures aim to reduce uncertainty and improve ease of doing business for issuers.
Phase II reforms
Phase II emphasises strengthening the Insolvency and Bankruptcy Code (IBC) framework.
Improved resolution efficiency can increase investor confidence in lower-rated bonds.
The phase also encourages product innovation and wider market access for non-top-rated issuers.
Static GK Tip: Effective bankruptcy resolution lowers credit risk premiums.
Phase III reforms
Phase III aims at deep market integration.
It explores global best practices, the idea of an independent bond market regulator, and a robust digital ecosystem.
This phase focuses on transparency, technology adoption, and long-term sustainability of the bond market.
Static Usthadian Current Affairs Table
Deepening India’s Corporate Bond Market:
| Topic | Detail |
| Report Released By | NITI Aayog |
| Report Focus | Deepening India’s Corporate Bond Market |
| CBM Size in India | 15–16% of GDP |
| Growth Trend | ₹17.5 trillion (FY2015) to ₹53.6 trillion (FY2025) |
| Key Regulators | SEBI, RBI, Ministry of Corporate Affairs |
| Major Challenges | Regulatory overlap, CRA issues, weak secondary market |
| Reform Model | Three-phase implementation strategy |
| Long-term Goal | Stable, liquid, and inclusive bond market |
