SEBI Plans Corporate Bond Reforms To Boost Retail Participation

India’s corporate bond market may soon become more accessible for everyday investors, as the Securities and Exchange Board of India (SEBI) prepares a fresh set of reforms aimed at improving liquidity and widening participation.

The regulator is considering products such as bond exchange-traded funds (ETFs), bond derivatives, and tokenised corporate bonds to make the market more active and easier to access.

Outstanding corporate bonds in India have already grown from around ₹17.5 lakh crore in FY15 to more than ₹59 lakh crore now, according to SEBI data.

SEBI Chairperson Tuhin Kanta Pandey said debt issuances in FY26 have already reached ₹9.1 lakh crore, nearly double the amount raised through equity markets during the same period. He noted that while the market has expanded rapidly, participation and liquidity still remain limited.

Why Is SEBI Focusing On Bond ETFs And Derivatives?

While addressing the CareEdge Debt Market Summit 2026, Pandey noted that bond ETFs and derivatives would allow corporate debt instruments to be easily available to individual investors through smaller investment opportunities and enhanced market liquidity. Using such securities may help institutional investors hedge their interest rate risks.

SEBI is also reviewing compliance rules for companies that only issue debt securities. At present, debt-listed firms follow disclosure norms that are largely similar to equity-listed companies. The regulator now plans to examine whether some of these rules can be relaxed for issuers focused only on bonds.

Another proposal under discussion is the creation of a separate regulatory category for debt brokers. SEBI feels that this approach can reduce the barriers to entry for such markets and attract specialised intermediaries.

Tokenised Bonds Could Be The Next Big Experiment

SEBI is also exploring a pilot programme for tokenised corporate bonds using distributed ledger technology. The project will test whether tokenisation can enable faster settlement, automated servicing, greater transparency, and improved traceability in bond transactions.

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According to SEBI Executive Director Maninder Cheema, tokenisation could help solve long-standing challenges in India’s bond market, including low liquidity and limited retail participation. The pilot is expected to roll out over the next six to nine months, although SEBI said it will move cautiously while evaluating operational and technology-related risks.

Sources:

The Economic Times

MSN