When overviewing the size of financial system in India in terms of GDP, the banking sector and the bond market, especially corporate bond market, are relatively underdeveloped while the stock market is comparable to other major countries in Asia. Non-financial corporations generally have a high dependence on borrowings from domestic financial institutions including banks, but the larger the corporations, the more they have diversified its funding sources including bonds and foreign currency borrowings from foreign financial institutions. More recently, companies have been increasing their borrowings from abroad against the backdrop of a declined lending capacity of domestic financial institutions reflecting non-performing asset problems of commercial banks and credit problems of non-banking finance companies (NBFCs). Diversification of funding sources is expected to provide lenders with such advantages as a dispersion of risk assets that unevenly concentrate in domestic financial institutions centering on banks. However, the fund raising from abroad is still limited to some of major local companies and multinationals, and there is no change to the fact that SMEs are confronted with the severe environment for fund raising. In addition, there is a mounting expectation for a utilization of private funds to finance strong infrastructure demands, making it indispensable for India to foster bond market together with improvement of domestic financial intermediation function.