'India's bond market needs to be seven times larger to match global standards'

India's bond market needs to be seven times larger to support India's growth, increase liquidity, broaden the investor-issuer base (especially mid-sized firms), and reduce bank dependence, aiming for global scale.

- TBG NETWORK

According to BVR Subrahmanyam, CEO of NITI Aayog, who released a comprehensive report on deepening the corporate bond market on Wednesday, the sevenfold expansion will support the country's growth ambitions and provide investors with stable, long-term financing options. Speaking at the release of "Deepening the Corporate Bond Market Report," Subrahmanyam highlighted a striking disparity. While India boasts world-class equity markets, its corporate bond market lags far behind, measuring just one-seventh the size of equity markets. In contrast, the United States has a corporate bond market larger than its equity markets. "We have one of the most efficient stock markets in the world," Subrahmanyam said, praising the National Stock Exchange as world-class. "But in comparison, the debt markets in India are largely still controlled by banks. Banks mediate the bulk of debt funding in India."

The NITI Aayog chief emphasised that the underdeveloped bond market poses a potential bottleneck to India's economic growth, particularly as the nation works toward becoming a developed economy. Infrastructure, housing, and other long-term investments require long-term financing--funding that typically comes through bond markets rather than equity.