SEBI and RBI Discussing Introduction of Corporate Bond Index Derivative

India’s debt market is set for a major development as the Securities and Exchange Board of India (SEBI), in collaboration with the Reserve Bank of India (RBI), works on rolling out corporate bond index derivatives, as per the news reports. 

This move is being seen as a fresh attempt to widen participation in bonds and elevate them as a serious investment class, especially at a time when the nation is focusing on alternative avenues for capital formation.

SEBI–RBI Collaboration and Market Context 

SEBI Whole-Time Member Ananth Narayan G confirmed that discussions with RBI on launching corporate bond index derivatives have progressed well. He noted that bringing settlement systems and trading processes closer to equity standards could give bonds greater investor appeal. 

Currently, the secondary bond market trades volumes of around ₹1.4 trillion in a month, compared to equities where the same value is exchanged in just a single day highlighting the potential gap in scale that regulators aim to address.

Previous Framework And Renewed Push

Although SEBI had issued regulations back in 2023 permitting futures on corporate bond indices comprising AA+ rated securities and above, those products failed to attract significant traction. To revive the segment, the regulator is now working with RBI on a new launch protocol. 

The effort comes against a backdrop of strong growth in corporate bond issuances: outstanding value has nearly tripled in a decade, rising from ₹17.5 trillion in FY15 to ₹53.6 trillion as of March 2025. Despite this surge, participation is still concentrated among institutional investors such as banks, insurers, mutual funds and provident funds, with retail and foreign investors playing only a marginal role.

Reforms To Widen Participation

In recent years, SEBI has introduced several reforms to build a more inclusive bond market. These include the launch of Bond Central, a centralised database for corporate bonds, new regulations for online bond platforms, and a reduction in the minimum investment size for privately placed bonds from ₹1 lakh down to ₹10,000. 

Read More: SEBI Seeks Greater Institutional Participation in the Infrastructure Sector!

Conclusion

The push for corporate bond index derivatives marks an important milestone in India’s journey to diversify its financial markets. If successfully implemented, the initiative could bridge the gap between equities and bonds, attract new categories of investors, and support long-term capital creation. With SEBI and RBI aligned, the debt market may finally begin to command the scale and depth that reflects its true potential.

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