The secondary market for corporate bonds has witnessed a sharp uptick over the past two years. In FY26, volumes grew 30% to ₹22.07 lakh crore, according to data from the Securities and Exchange Board of India (Sebi), up from ₹17.1 lakh crore in FY25. Prior to this, volumes had remained stagnant in the ₹13–15 lakh crore range for nearly seven years.
Market experts attribute the surge largely to regulatory changes introduced by Sebi and the Reserve Bank of India. The rise of online bond platforms has further contributed to increased activity in the secondary market.
The government, in the Union Budget, has also announced initiatives such as a market-making framework aimed at improving liquidity that will provide further boost.
What did Vishal Goenka say?
“Proactive regulations and efforts by market intermediaries to strengthen financial infrastructure, coupled with lacklustre and volatile equity market performance over the past two years, have pushed investors toward fixed-income diversification,” said Vishal Goenka, co-founder of IndiaBonds. He added that a benign interest rate environment, with multiple rate cuts last financial year, also supported higher volumes.
Nikhil Aggarwal, founder and group CEO of Grip Invest, noted that growing retail participation has also played a key role. “Regulatory measures to enhance market accessibility have spurred a surge in retail participation,” he said. A significant boost came when Sebi reduced the minimum investment size for corporate bonds to ₹10,000 from ₹1 lakh.
Liquidity window introduced by SEBI
Additionally, Sebi introduced a liquidity window enabling investors to sell bonds back to issuers. The regulator has also indicated at multiple forums that it is working to revamp corporate bond indices to encourage broader participation.
At the same time, the Reserve Bank of India removed the ceiling on loans against corporate bonds, a move expected to increase interest among high-net-worth individuals, family offices, and corporate treasuries.
Industry experts said market volatility also supported higher trading activity. “The year saw some volatility in bond markets that likely boosted secondary market turnover. Volatility during shifts in the interest rate trajectory often leads to repositioning by market participants, driving higher volumes,” said Puneet Pal, head of fixed income at PGIM Mutual Fund.
He added that moderate volatility creates trading opportunities, while extreme fluctuations can deter activity. A certain degree of volatility is essential to sustain robust secondary market liquidity.
The upward trajectory is expected to continue, supported by rising awareness and sustained regulatory push.
According to Goenka, post-pandemic wealth creation in India has increased demand for portfolio diversification and capital preservation—needs that fixed-income investments are well-positioned to address. “I expect the trend toward fixed-income investments to accelerate further in FY27, especially as they currently account for just about 3% of demat accounts in the country,” he said.