Sebi Eyes Bond ETFs and Tokenisation to Bolster Corporate Debt Market

India's corporate bond market, which has seen debt fundraising approach ₹9 lakh crore (approximately $108 billion USD), is poised for significant structural reforms. Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (Sebi), has advocated for a more robust and diversified bond market to underpin sustained economic expansion. Key proposals include the introduction of bond Exchange Traded Funds (ETFs), designed to enhance liquidity and provide retail investors with easier access to fixed-income instruments. Pandey also emphasized the need for strengthened disclosure norms to improve transparency and investor confidence within the corporate debt segment. A notable initiative highlighted by the Sebi chief is the exploration of tokenisation pilots. This technology, leveraging blockchain, could potentially streamline issuance, trading, and settlement processes, thereby reducing transaction costs and increasing market efficiency. The push for these reforms is driven by a desire to reduce the corporate sector's reliance on traditional bank-led financing, fostering a more balanced capital structure. By deepening the corporate bond market and encouraging greater retail participation, Sebi aims to unlock a new avenue for long-term capital formation, crucial for India's infrastructure development and industrial growth targets. These measures collectively seek to create a more resilient and dynamic financial ecosystem, better equipped to channel domestic savings into productive investments.