Banks and financial firms now own the lion’s share of India’s corporate bond market, accounting for 60% of long‑term issuances since January 2025—
A sharp concentration that has pushed risk‑free rates higher for non‑bank issuers, tightening credit spreads across the board—
The auto, textile and IT sectors together raised a mere 1% of total bond issuance, underscoring a shift toward financial‑sector debt as investors hunt liquidity and higher yields—
Investors are watching the coming months for any policy signals that might loosen the bank‑centric structure, with the Reserve Bank of India expected to review its liquidity‑support measures before the next policy meeting—
The bond‑market reaction is already visible: bank‑issued bonds are trading at tighter spreads than their non‑bank counterparts, a trend that could ripple into equity valuations for banks and financial services firms listed on the NSE and BSE—
Looking ahead, analysts anticipate a surge in bond issuances from banks in the Q3‑2026 window, which may further compress yields unless the RBI intervenes—