Expanding India's Bond Market: Moving Savings Beyond Gold and Real Estate
Today, when we talk about derivatives and tokenisation, the bigger question is: how do we expand and deepen India’s financial markets?
Speaking at the India Fixed Income Summit on May 26, 2026, AK Mittal, MD and CEO at AK Capital Services, shared his views on the history of the Indian Bond Market and the way forward.
Mittal highlighted that India’s economy is around USD 3.95 trillion, compared with USD 31.86 trillion for the US and USD 20.4 trillion for China. However, when it comes to corporate bonds, India’s market is only around USD 0.64 trillion, while the US is at USD 11.55 trillion and China at USD 11.15 trillion. As a share of GDP, India’s corporate bond market remains very small.
Municipal bonds are another area where India lags. The country has only around USD 0.5 billion in municipal bonds, compared to trillions in the US and China. The issue is not that India is borrowing too much, but that many who have the capacity to borrow are not doing so. Productive borrowing can help markets grow.
Another concern is India’s savings rate. Countries like China save nearly 40 percent of their GDP, while India’s savings rate is lower. Moreover, whatever savings are happening are not always flowing into productive assets like bonds; instead, a significant portion goes into real estate and gold.
To grow the market, financial products must reach beyond metro cities and penetrate deeper into Bharat. Debt distribution needs to expand. Currently, many savers feel discouraged because inflation reduces real returns. If inflation is around 4 percent and bank deposits give around 5 percent before taxes and deductions, real gains remain limited.
Mittal also mentioned that the bond market can potentially provide better inflation-adjusted returns. If investors can directly participate, efficiencies improve, and savings become more productive. MSMEs continue to face high borrowing costs, sometimes 12 percent to 20 percent or more, which makes growth difficult. Manufacturing needs capital, and efficient debt markets can support that.
If India wants to become a developed economy, it needs stronger savings mobilisation and a broader bond market that reaches smaller towns and regions, not just large urban centres.
Vishal Goenka, Co-Founder of IndiaBonds, added that the demand for fixed income has always existed in India, with people already investing through insurance premiums, pension funds, and FDs. What was missing was the architecture and access. With India Stack, digital KYC, and the regulatory OBPP framework, trust is being established in the financial infrastructure. Technology now allows you to buy a bond in under 5 minutes, democratizing the last bastion of finance.
