Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Monday said the capital markets regulator and the Reserve Bank of India (RBI) are jointly working on introducing derivatives on corporate bond indices as part of efforts to deepen India's corporate bond market.
Addressing the ICICI Securities India Investor Conference 2026 in Mumbai, Pandey said the architecture of the corporate bond market has been significantly strengthened in recent years. "The Electronic Book Provider platform has been expanded to include issuances by REITs and InvITs, improving transparency and efficiency in the debt market," he said.
In line with the Union Budget announcement, a working group is currently finalising operational details for a market-making framework aimed at improving liquidity in the corporate bond market. "Additionally, SEBI and RBI are working together to introduce derivatives on corporate bond indices," Pandey said.
The remarks come days after the RBI, in its June 5 monetary policy review, announced tax-related relief for foreign investors in government securities, exempting foreign institutional investors (FIIs) and foreign portfolio investors (FPIs) from taxation on such investments.
Highlighting measures to attract overseas investors, Pandey said SEBI has undertaken several initiatives to simplify investment procedures. "The SWAGAT framework provides a single-window, streamlined onboarding experience for trusted investors. Regulatory requirements for FPIs investing in government securities have been eased," he said.
He added that processes have been simplified through standardised forms, digital-signature-based document submissions and tracking mechanisms. SEBI is also working with custodian banks and the RBI to substantially reduce timelines for FPI registration and onboarding.
According to Pandey, market structure reforms, including enhancements to closing auction mechanisms and block deal frameworks, have improved price discovery and market liquidity.
The regulator is also reviewing the variable net-worth requirement framework for stock brokers to ensure that capital requirements better reflect operational scale and risk. In addition, SEBI has proposed a more practical framework governing the use of intraday borrowing by mutual funds.
The proposed corporate bond index derivatives and market-making framework are expected to broaden participation, improve liquidity and strengthen the overall depth of India's corporate debt market.