FinMin targets corporate debt market gaps

The corporate debt market in Pakistan remains underdeveloped relative to the economy's financing needs, even as the equity market has shown encouraging progress, Finance Minister Muhammad Aurangzeb observed while chairing a meeting of the Capital Market Development Council (CMDC) on Friday.

According to a statement, the minister stressed the need to deepen the debt capital market, reduce reliance on bank financing and create a more balanced financial ecosystem, particularly for small and medium enterprises (SMEs).

The meeting reviewed progress on capital market reforms and discussed a detailed external study underway on the development of Pakistan's local currency-linked bond market. The study will cover sovereign financing, non-bank financial institutions, primary dealer arrangements, secondary market development, and hedging and derivatives markets. Aurangzeb emphasised that the study should provide practical, evidence-based recommendations supported by international benchmarking.

The meeting also reviewed findings from stakeholder consultations undertaken by the Securities and Exchange Commission of Pakistan (SECP) to assess challenges faced by top-100 listed companies in accessing the corporate debt market. The minister highlighted the need to expand engagement beyond the largest listed companies to include medium-sized enterprises and other growth-oriented businesses.

Aurangzeb advised the SECP and the Pakistan Stock Exchange (PSX) to establish dedicated debt desks at the senior management level with clearly defined mandates and measurable performance indicators. He also called for simplifying the corporate debt issuance process through greater coordination among the SECP, PSX and Central Depository Company (CDC). The minister urged the development of a streamlined one-window listing framework supported by standardised procedures and digital integration to improve transparency and ease of access for prospective issuers.

Discussions also covered the continued development of Pakistan's Islamic capital market, including measures to deepen the domestic Sukuk market, strengthen secondary market liquidity and facilitate greater issuance of green and sustainable financial instruments. Participants also reviewed policy proposals relating to taxation, SME preparedness, financial literacy and digital distribution platforms.