SEBI, RBI in discussion to encourage trading in corporate bond index derivatives, says Ananth Narayan

Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) are in discussion for encouraging trading in the corporate bond index derivatives, said Whole Time Member, Ananth Narayan during an address at ASSOCHAM National Council for Corporate Bonds event in Mumbai on September 19.

“Corporate bond index derivatives trading is another frontier in this regard. Good discussions are ongoing between SEBI and RBI, and we are hopeful that we will see progress soon,” Narayan said.

Secondary bond volumes are about Rs 1.4 lakh crore a month. Equity markets trade around that much in a single day. If we can make bond trading more comparable to equity trading — in settlement, platforms, even trading culture — we might well see this investment class take off, he added.

On the municipal bonds front, he said that from 2017 till date, just 16 issuances have happened amounting to Rs 3,134 crore, which is a mere 0.02 percent of GDP.

SEBI has been pushing for outreach and training programs along with NISM, including a dedicated e-learning course for municipal officials, Permission for green municipal bonds since 2022, Launch of the IBMX municipal bond index in February 2023, to track and benchmark issuances, he added.

“The potential here is immense, but so is the need for capacity building and investor confidence,” Narayan said.

Outstanding corporate bonds have risen from Rs 17.5 lakh crore at the end of FY15 to Rs 53.6 lakh crore as of March 2025, a CAGR of over 12 percent. In FY25 alone, corporate bonds worth Rs 10 lakh crore were issued, and in FY26, Rs 3.5 lakh crore were issued by July.“But the market remains dominated by institutional investors — banks, insurers, provident funds, mutual funds. Retail and foreign investors remain on the fringes,” Narayan said.