The corporate bond market in India requires broader participation and deeper retail investor awareness to meaningfully improve liquidity and price discovery, Kamlesh Shroff, President of the Association of NSE Members of India (ANMI), said on Thursday, 20 August. Shroff made the remarks in New Delhi, highlighting a structural gap that has persisted even as equity markets have matured significantly over three decades.

Equity Culture vs Debt Market Growth

Shroff noted that while equity investment culture in India has developed considerably over the past three decades, the debt market has been considerably slower to gain traction among ordinary investors. 'Predominantly, the equity cult in our market is far more superior and has built up in the last three decades. The debt market has been very slow in picking it up,' he said. He added that increased awareness about available corporate bond products and the volumes being generated would gradually draw retail investors into the segment.

Why Liquidity Is the Core Problem

On the question of liquidity, Shroff was direct: without it, price discovery suffers. 'If you have liquidity, it is when you have a proper market. So, if you don't have liquidity, your downside is then your prices, price discovery comes into play,' he said. He argued that higher participation and greater market breadth would create a virtuous cycle — more orders entering the system, better matching, and ultimately fairer pricing for all participants. 'The market will get a larger breadth and depth. So, when those 320 trades get into orders, go into the system, it will have a larger depth from that perspective. The matching will also have a better price discovery,' Shroff explained.

Role of Fixed Income Channel Partners

Shroff also welcomed the proposed introduction of fixed income channel partners, saying these intermediaries could be instrumental in driving awareness and guiding investors across geographies. 'They are the ones who can actually advise, create awareness to all the people across all the pin codes. So, it's a good system and a way forward,' he said. This comes amid broader regulatory efforts to deepen India's debt market, which remains dominated by institutional players despite repeated policy nudges toward retail inclusion.

Riskometers and Investor Risk Appetite

On the utility of riskometers in corporate bonds, Shroff said such tools are valuable because investors carry varying risk tolerances. Mechanisms that clearly communicate the risk profile of individual instruments can help retail participants make more informed decisions, he noted. Notably, India's corporate bond market has long been flagged by regulators, including the Securities and Exchange Board of India (SEBI), as underdeveloped relative to the size of the economy. Deeper retail engagement remains one of the key unresolved challenges.

What Needs to Happen Next

Shroff's remarks reflect a growing consensus among market intermediaries that structural reforms — awareness campaigns, channel partner networks, and better risk communication tools — must work in tandem to unlock retail participation in corporate bonds. With India's equity markets hosting tens of millions of registered investors, the debt market's relative lag represents both a challenge and a significant opportunity for the financial ecosystem.