NSE CEO flags weak foreign investor participation in India's corporate bond market

Mumbai (Maharashtra) [India], May 26 : Ashish Kumar Chauhan, MD and CEO of the National Stock Exchange (NSE) on Tuesday flagged weak foreign portfolio investor (FPI) participation in India's corporate bond market, even as he stressed that the country's debt market must expand significantly to support the ambitions of Viksit Bharat 2047.

Speaking at the CareEdge Debt Market Summit 2026, the NSE CEO said India's corporate bond market has grown steadily in recent years, but remains far smaller than global peers and continues to face structural challenges.

"India's ambition of Viksit Bharat 2047 demands investments rising from around 30 per cent of GDP to more than 35 per cent. Bank credit alone cannot carry that burden. Corporate bonds must play a far larger role," Chauhan said.

He noted that India's outstanding corporate bond market has grown at an annualised pace of 13.6 per cent to Rs 59.1 lakh crore in FY26, with the market now accounting for 17.1 per cent of GDP, up from 11.7 per cent in FY12.

However, Chauhan said the market would need to double in size to meet the country's long-term financing needs. "NITI Aayog has projected that India's corporate bond markets could grow to Rs 120 lakh crore from currently around Rs 60 lakh crore by 2030. That is not merely an aspiration, it's a financing necessity," he said.

The NSE chief also highlighted the sharp rise in retail participation in India's bond markets, driven by digital platforms, lower ticket sizes and regulatory reforms.

According to Chauhan, individual investors now account for 77 per cent of total trade counts on NSE's debt market platform in FY26, signalling what he described as a "striking signal of democratization".

He said cumulative unique client registrations on NSE's secondary market debt platform had risen to 12.7 lakh individuals by February 2026. Monthly client additions, which averaged just 200 in FY21, have now accelerated to nearly 65,000 per month.

"April 26 alone recorded 3,21,156 new registrations, the highest single-month addition in the series, and nearly 11 times the level of April 25," he said.
Chauhan also pointed to the emergence of online bond platform providers and the reduction in minimum face value for listed debt securities to Rs 10,000 as key drivers behind growing retail participation.

At the same time, he cautioned that India's corporate bond market remains heavily dependent on private placements, limiting broader retail access to primary issuances.
"Over the five years, financial year 22 to 26, corporates raised approximately Rs 60,000 crore through just 193 public issues compared with Rs 40.7 lakh crore through over 7,800 private placements," he said.

"Public issues account for barely 1.5 per cent of total issuance volume," Chauhan added, underlining the need to deepen public debt issuances and widen the issuer base beyond highly rated corporates.

The NSE CEO also expressed concern over low foreign investor participation in India's debt markets despite recent improvements.
"FPI participation in corporate bonds, while recovering, remains a meaningful gap," he said, adding that foreign investments of Rs 1.3 lakh crore in FY26 represented only 15 per cent utilisation of the permissible limit.

He attributed the subdued participation to structural constraints around operational complexity, tax treatment, and hedging availability, that require coordinated policy action.

Chauhan said recent reforms by the government, the Securities and Exchange Board of India and the Reserve Bank of India, including credit derivatives framework and proposed corporate bond index derivatives, would help improve market liquidity and participation going forward.