Aurangzeb calls for corporate bond market reforms to boost private sector financing

Federal Minister for Finance and Revenue Muhammad Aurangzeb on Wednesday chaired a meeting of the Capital Market Development Council (CMDC) to review progress on reforms aimed at strengthening Pakistan’s capital markets.

The meeting focused on expanding the corporate debt market and increasing the role of capital markets in financing economic activity.

In his remarks, the finance minister said capital markets should complement the banking sector by providing long-term financing options for businesses while offering investment opportunities for institutional and retail investors.

He said the development of a corporate bond market would help mobilise domestic savings and support private sector investment.

Aurangzeb said reforms should address issues across the capital market framework, including issuance procedures, regulatory requirements, market infrastructure and liquidity in the secondary market.

He directed the Securities and Exchange Commission of Pakistan to expand outreach efforts so that companies and financial institutions are aware of recent regulatory changes aimed at facilitating corporate bond issuance.

The meeting also discussed the importance of reviewing international practices in capital market development and adapting relevant measures to Pakistan’s market structure.

Participants reviewed policy measures designed to encourage companies to raise funds through capital markets rather than relying solely on bank financing.

Officials from the Tax Policy Office informed the meeting that consultations had begun to examine tax-related issues affecting investors and issuers, with the aim of rationalising the tax structure and considering incentives to increase participation in capital markets.

Representatives from the Pakistan Stock Exchange, Securities and Exchange Commission of Pakistan, State Bank of Pakistan, Central Depository Company, National Clearing Company of Pakistan Limited, Pakistan Banks Association and Pakistan Business Council briefed the meeting on steps taken to facilitate corporate bond issuance and improve market operations.

Participants said recent reforms include simplified prospectus requirements, streamlined documentation procedures, reduced regulatory fees and digitisation of the issuance process.

The meeting also discussed structural challenges affecting the corporate bond market, including delays in approval processes and the need for improved coordination among regulators and market participants.

Participants emphasised the need to strengthen secondary market liquidity, noting that limited market-making arrangements currently restrict trading activity in corporate debt instruments.

The council also reviewed broader reform plans aimed at improving coordination among regulators, market infrastructure institutions and private sector participants.

Under the reform framework, specialised working groups will be formed to focus on areas including tax policy, debt issuance frameworks, market infrastructure and investor protection.

The finance minister said the government remains committed to developing a stronger capital market to mobilise investment, improve financial stability and support private sector-led economic growth.