India must build deeper financial markets to fund its Viksit Bharat goals by 2047, RBI Deputy Governor Rohit Jain said at the Financial Institutions Leadership Conference in Mumbai on July 24, 2026. He stressed that deeper Indian financial markets are essential to channel long-term savings into productive investment. The event was organised by Standard Chartered Bank.
Why Deeper Indian Financial Markets Are Needed
India has traditionally relied on bank-led financing. However, the scale of capital required for infrastructure, manufacturing, and technology cannot be met through bank balance sheets alone. Therefore, stronger corporate bond markets, government securities markets, and foreign exchange derivative markets must develop alongside the banking sector.
Jain noted that household savings are increasingly flowing into insurance, pensions, and mutual funds. As a result, well-functioning markets can connect these long-term savings with long-term investment needs. Additionally, wider access to market-based finance will help more enterprises grow beyond a dependence on bank credit.
He also highlighted that markets must be built before the economy reaches developed status — not after. For example, a reliable sovereign yield curve requires active price discovery across multiple maturities, not just benchmark securities. The RBI has recently issued new guidelines to expand participation in the term money market to support this goal.
Key Priorities: Liquidity, Risk Distribution, and Resilience
Jain outlined three tests for market depth. First, markets must deliver quality liquidity and genuine price discovery. Second, they must distribute risk efficiently across a broad range of participants. Third, they must remain resilient even when conditions turn difficult.
On risk markets, he welcomed RBI’s recent reforms, including Total Return Swaps, futures on credit indices, and expanded Credit Default Swaps. Meanwhile, he cautioned that complexity should never be mistaken for sophistication. Products must address real economic needs and be clearly understood by users.
Jain placed shared responsibility firmly on all stakeholders. Regulators provide the framework, but market institutions must invest in expertise, quote prices, and support liquidity actively. Issuers must maintain strong disclosure standards, and investors must assess risk independently rather than rely solely on external ratings.
“The quality of India’s financial markets will ultimately reflect the collective choices made across the ecosystem,” he said, calling on all institutions to convert regulatory opportunity into capability and trust.
Source: RBI Speeches
