For a long time, India's corporate bond market was viewed as a large but underutilised segment of the financial system. Despite its size, the market often faced challenges such as limited liquidity, modest investor participation, and a long-standing preference among companies for bank-led financing. Secondary market activity was relatively muted, and retail investors often found it difficult to participate meaningfully.
Recent years, however, have brought noticeable changes. FY25 marked a significant milestone, with Indian companies raising approximately ₹9.9 trillion through corporate bond issuances. This was one of the highest annual figures recorded and reflected steady participation from a broad mix of issuers. In comparison, FY24 had seen issuances near ₹8.6 trillion, indicating expanding interest and utilisation of market-based funding channels.
The momentum continued into FY26. In the first quarter alone, corporate issuances crossed ₹2.79 trillion, suggesting that overall activity for the fiscal year may remain strong.
If this pace sustains across future quarters, corporate bond fundraising for FY26 could potentially approach levels around ₹11 trillion, based on current run rates. These numbers underline the growing role that India's bond market is beginning to play in corporate financing.
The broader trend reflects more than just issuance volumes. It also signals India's gradual transition toward a more diversified funding ecosystem. Companies are increasingly exploring different financing avenues ranging from bank loans and commercial paper to long-term bonds to align with evolving business requirements. At the same time, improvements in digital infrastructure, regulatory initiatives, and market transparency have enabled wider participation, especially among individual investors exploring fixed-income instruments as part of their diversified portfolios.
These developments do not eliminate long-standing structural considerations—market liquidity, participation depth, and transparency remain important focus areas. But they illustrate how the corporate bond market is steadily becoming an important component of India's capital flow landscape, complementing traditional banking channels and offering new ways for investors and issuers to engage with the debt market.
The perfect storm: Key factors behind the surge in 2025
Several interconnected developments contributed to the significant rise in corporate bond issuances during 2025. Rather than being driven by a single factor, the momentum reflected a combination of monetary, fiscal, and structural conditions that collectively encouraged greater activity in the market.
One major element was the monetary environment. Between February and June 2025, the Reserve Bank of India reduced the policy repo rate by a cumulative 100 basis points, lowering it from 6.25% to 5.50%. These adjustments contributed to increased liquidity in the financial system and influenced yield movements across fixed-income categories.
During this period, yields on several high-quality corporate bonds softened in line with broader market conditions. For example, AAA-rated corporate bond yields eased from levels observed earlier in the year, prompting many companies to reassess their long-term financing plans. For issuers that had planned medium- to long-tenor borrowing, the evolving interest-rate environment encouraged engagement with the bond market.
The June 2025 policy decision, which involved a 50-basis-point reduction in the repo rate, coincided with an uptick in issuance volumes. That month recorded corporate bond issuances of approximately ₹1.10 trillion, reflecting increased participation from firms aligning their funding strategies with prevailing market conditions.
In parallel, the Reserve Bank of India reduced the cash reserve ratio (CRR) from 4% to 3%, increasing liquidity available within the banking system. The resulting expansion in lendable resources encouraged financial institutions to explore varied deployment channels, including fixed-income instruments.
Fiscal developments also contributed to the broader funding landscape. The government maintained a consistent emphasis on capital expenditure, particularly across infrastructure, transportation, and energy segments. With several long-duration projects underway under national development programs, companies associated with these initiatives continued to tap into multiple financing avenues — including bond issuances — as part of their capital planning.
Overall, the notable increase in corporate bond activity during 2025 stemmed from a confluence of monetary easing, liquidity expansion, infrastructure-focused fiscal activity, and improved participation in the market ecosystem.
The sectoral breakdown: Which segments contributed most to issuance activity
Corporate bond issuance data from FY25 and early FY26 shows participation from a broad range of sectors, each engaging with the market based on its specific funding needs and business models.
Non-Banking Financial Companies (NBFCs)
NBFCs accounted for a significant share of issuances, representing approximately 53% of Q1 FY26 volumes. As entities that rely on market-linked funding to support their lending operations, NBFCs have traditionally been active participants in the corporate debt segment. Increased market participation and expanding digital distribution channels have supported their ongoing issuance activity.
Infrastructure and energy companies
Infrastructure and energy-linked entities formed another substantial segment. They collectively raised around ₹2.33 trillion, representing roughly 23.5% of issuances during the period referenced. Participants in this category included:
· Power Grid Corporation
· Indian Railways Finance Corporation
· Renewable energy companies
· Infrastructure investment trusts (InvITs)
Infrastructure investment trusts, in particular, reported plans for additional fund-raising during the fiscal year, reflecting the capital-intensive nature of their operations.
Manufacturing and industrial sectors
Manufacturing and industrial companies contributed approximately ₹1.50 trillion, or 15.2% of total issuances. These issuances aligned with capital expenditure cycles and long-term project planning within the sector.
Banking and financial institutions
Banks continued to access the bond market as well. For example, in October 2025, State Bank of India issued ₹7,500 crore of Tier-2 bonds with a 10-year tenor, which received notable participation from investors. While bank issuance volumes formed a smaller share compared to NBFCs, they remained meaningful in absolute terms due to the size of the institutions involved.
The global capital flows: Growing FPI participation
Foreign portfolio investors (FPIs) continued to play a visible role in India's debt markets during FY25. Investments in Indian corporate bonds reached approximately ₹1.21 trillion, up from ₹1.08 trillion in FY24. May 2025 recorded inflows of around ₹20,996 crore, one of the highest monthly figures in recent years. April 2025 had seen outflows, but subsequent months reflected renewed participation from global investors.
A number of developments contributed to this engagement. India's inclusion in the JP Morgan Emerging Markets Bond Index led to additional foreign interest in domestic debt instruments, particularly government securities. Discussions around inclusion in other major global indices—such as those by Bloomberg and FTSE Russell—have further supported global familiarity with India's fixed-income market. Over time, index representation tends to influence inflows from international funds that track or benchmark against these indices.
Differences in bond yields across geographies also shaped allocation decisions for some investors. Yield spreads between Indian and U.S. fixed-income securities fluctuated during FY25, influencing global allocation models used by institutional investors. Such spreads are one of several factors FPIs assess when evaluating relative value among global fixed-income markets.
In addition to yield considerations, broader macroeconomic elements such as India's economic performance, sovereign credit environment, currency dynamics, and policy consistency have contributed to FPI engagement. As global investors diversify their emerging-market exposure, India's bond market continues to draw interest within the broader asset-allocation frameworks used by international institutions.
The secondary market: Signs of increasing activity
The secondary market for corporate bonds has shown meaningful changes in recent years. Average daily turnover increased from approximately ₹5,722 crore in FY24 to around ₹7,645 crore in FY25, reflecting higher participation and transaction volumes.
In addition to turnover growth, trade characteristics have also evolved. The average transaction size decreased from about ₹1.44 crore to ₹1.07 crore, indicating a growing number of smaller trades and wider participation across investor categories, including non-institutional investors.
Technology and regulatory initiatives have supported this shift. SEBIs introduction of electronic bidding platforms for private placements has contributed to enhanced transparency and more structured execution workflows. The adoption of the Request for Quote (RFQ) platform has increased notably, with a significant portion of trades now being executed electronically rather than through traditional over-the-counter channels.
These digital and regulatory developments have contributed to:
· Better visibility into pricing
· More standardised trade execution
· Increased accessibility for a wider range of market participants
Altifi: Part of the new digital wave in bond access
As India's corporate bond ecosystem evolves, digital platforms have played an important role in widening access to fixed-income products. Among these platforms, Altifi, backed by Northern Arc Capital, reflects this broader shift toward technology-enabled distribution.
Altifi offers access to a range of fixed-income instruments — including corporate bonds, government securities, commercial papers, treasury bills, and state development loans — through an online interface designed for ease of use. The platform enables investors to explore products, review available information such as yields and credit ratings, complete digital KYC, and track their holdings in one place.
Over time, the platform has seen an expanding user base, with approximately 59,000 registered users and cumulative investments crossing ₹1,220 crore. This growing participation indicates increased interest among retail investors in exploring fixed-income instruments as part of their personal financial planning.
Altifis mobile-first approach aligns with how many individuals now engage with financial services. The ability to evaluate multiple issuers, maturities, and credit ratings digitally helps users make more informed decisions without relying on traditional offline channels.
More broadly, platforms like Altifi reflect a structural transition taking place in India's fixed-income market. What was once a space accessed mostly by institutions is gradually becoming more accessible to individual investors, supported by:
· Lower minimum investment amounts on certain instruments,
· Streamlined onboarding processes, and
· Improved digital infrastructure.
The Q2 momentum shift: Understanding the deceleration
Corporate bond issuance patterns in FY26 highlight both periods of acceleration and moderation. After a strong Q1, issuances in Q2 FY26 eased to around ₹2.0 lakh crore, compared with ₹3.2 lakh crore in Q2 FY25, reflecting a year-on-year decline of approximately 38%.
On a fiscal-year-to-date basis through September, cumulative issuances totaled nearly ₹5.5 lakh crore, modestly ahead of the same period in the previous year, yet clearly showing a slower pace relative to Q1.
Several factors contributed to this deceleration.
1. Relative cost dynamics between bonds and loans
With the repo rate at 5.50%, the external benchmark–linked lending rates for bank loans adjusted accordingly. As loan rates became comparatively more cost-effective for certain tenors, some companies opted for bank borrowing rather than market issuance during Q2. These decisions reflected cost considerations rather than market stress.
2. Accounting and regulatory treatment
Adjustments in accounting approaches for certain debt instruments influenced participation by banks and institutional investors. Banks, which had been active issuers in FY25, reduced issuance activity in FY26 except for select transactions such as SBIs October offering.
3. Liquidity and global conditions
Periods of liquidity tightness, combined with global macroeconomic uncertainties, contributed to wider credit spreads in some cases by 20–30 basis points across rating categories. These conditions influenced issuance timing and pricing for several entities.
Even with this moderation, broader structural developments — including enhanced market infrastructure, regulatory initiatives, and increased digital participation — continued to support the overall functioning of the market.
Market size in perspective: The ₹53.6 trillion landscape
As of March 2025, the outstanding corporate bond stock in India reached approximately ₹53.6 lakh crore, accounting for about 22.5% of the broader bond market. This represents long-term expansion from earlier periods; for instance, outstanding stock was near ₹10.51 lakh crore in FY12.
When viewed from a global perspective, ₹53.6 trillion (around $645 billion USD) positions India's corporate bond market among the larger emerging-market debt segments and comparable to portions of developed-market corporate bond universes.
The persistent challenge: Dominance of private placements
Despite expanding issuance activity, private placements continue to represent the majority of corporate bond issuance. In FY25, approximately 99.2% of issuances were executed through private placements, with public issuances accounting for less than 1%. A similar pattern has continued into FY26, with most H1 issuances following the private placement route.
This preference reflects several practical considerations:
· Faster execution timelines
· Lower compliance and disclosure requirements
· Customisable terms for institutional investors
· Established processes between issuers and large debt investors
However, heavy reliance on private placements also limits secondary market liquidity, given that securities issued to smaller investor groups tend to trade less frequently.
Regulators have acknowledged this structural characteristic. SEBI has introduced measures aimed at making public debt issuance more accessible, including adjustments to disclosure norms and issuance frameworks. Even so, transitions in issuance patterns are likely to remain gradual due to inherent differences between public and private processes.
Forward look: Market evolution through FY26 and beyond
Future issuance activity will continue to be shaped by multiple variables, including policy rates, global financial conditions, sectoral borrowing requirements, and liquidity trends. Monetary policy decisions whether related to rate levels or liquidity measures can influence the relative appeal of different financing channels for issuers.
Regardless of quarter-to-quarter issuance levels, several developments underscore the long-term trajectory of India's corporate bond market:
· Broader issuer participation across sectors
· Advancements in digital access and distribution
· Growing engagement from overseas investors
· Continued evolution of secondary-market infrastructure
· Regulatory support for greater transparency and participation
Conclusion: A market evolving toward greater depth
India's corporate bond market has undergone significant expansion in recent years, reflected in issuance activity such as the ₹9.9 trillion raised in FY25. These developments highlight how market participation and infrastructure have continued to evolve.
Where earlier issuance activity was concentrated in private placements and dominated by institutional investors, recent years have seen the emergence of digital interfaces, lower investment thresholds on certain instruments, and broader participation across investor categories. These trends indicate a widening ecosystem supported by regulatory initiatives, improved transaction infrastructure, and greater availability of market information.
Multiple factors have contributed to this growth phase, including monetary conditions, liquidity dynamics, continued emphasis on infrastructure financing, and enhancements in market technology. Sectors ranging from financial services to infrastructure and manufacturing have participated in the bond market to address diverse funding needs. Alongside them, domestic institutions, foreign portfolio investors, and individual investors have engaged with the market in various capacities.
Digital platforms such as Altifi form part of this broader evolution by offering simplified access to fixed-income instruments and online tools that help investors review available information and complete transactions more efficiently. In parallel, regulatory measures and technology-led improvements in price discovery and transparency have supported a more connected secondary market.
Looking ahead, India's corporate bond market remains an important component of the countrys overall financing landscape. As participation continues to expand and market infrastructure progresses, the ecosystem is positioned to support a wider range of issuers and investors, contributing to the markets long-term development within India's financial system.