Deepening bond market critical to reducing over-reliance on bank credit, says NITI Aayog CEO

B.V.R. Subrahmanyam, CEO, NITI Aayog, released the report titled "Deepening the Corporate Bond Market in India" yesterday. The report highlights the opportunity for the corporate bond market to play an even greater role in mobilising capital for infrastructure, MSMEs, green and transition finance, and emerging sectors. Drawing on international experience, the study outlines a sequenced set of reforms across several fronts such as strengthening the legal and regulatory framework; enhancing market infrastructure and transparency; facilitating greater issuance by mid-size firms; broadening participation of insurance, pension and retail investors; expanding product offerings such instruments with credit enhancement, long-tenor bonds, and sustainability-linked products; improving liquidity in both primary and secondary market through deeper market-making and repo facilities; and leveraging digital innovations including tokenised bonds and integrated data systems.

Speaking on the occasion, Subrahmanyam noted that deepening the bond market is critical to reducing over-reliance on bank credit, improving capital allocation efficiency, and mobilising private finance to support India's development priorities. He emphasised that a stronger, more diversified corporate bond market will be central to securing long-term, stable, and affordable financing and to achieving India's Viksit Bharat @2047 vision. The recommendations outlined in this report offer a practical blueprint for improving capital market transparency, widening the investor base, supporting lower-rated issuers, and modernising market infrastructure in line with global practices, he stated.

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