MUMBAI: State Bank of India (SBI) Chairman C.S. Setty on Wednesday emphasised the need for greater participation from mutual funds, pension funds, and insurance companies in the corporate bond market to help deepen and diversify the segment.
Setty pointed out that while corporate savings and household investments are increasingly flowing into insurance and mutual fund categories, their involvement in the corporate bonds market remains inadequate. “A lot of corporates are willing to issue bonds, but the active participation of mutual funds and insurance funds is missing,” he said during an industry event.
He noted that mutual funds and pension funds primarily invest in AAA-rated bonds, which limits their contribution to the market’s overall growth. “This narrow investment approach does not help in deepening the corporate bonds market. For the market to truly evolve, it must play a significant role in financing infrastructure and supporting the balance sheet funding needs of corporates,” Setty added.
SBI’s corporate bond
Setty lamented the lack of progress despite years of discussions around enhancing the depth of the corporate bonds market. Highlighting SBI’s active role, he said the bank has raised Rs50,000 crore through corporate bonds this year, making it the largest issuer in the market.
Several other banks have also tapped the corporate bonds market in the current fiscal year. These include HDFC Bank, ICICI Bank, and Axis Bank, which have collectively raised significant amounts to fund their operational and lending activities.
Setty’s remarks underline the need for a broader base of institutional investors to achieve a robust and diversified corporate bond market capable of meeting the economy’s long-term financing needs.
