India's corporate bond market may see some action soon
The Indian government may announce some steps soon to deepen the corporate bond market to attract long-term investments, especially into the infrastructure sector.
Finance Minister P. Chidambaram Saturday chaired a meeting of financial regulators in the capital which discussed a roadmap for structural shift towards a diverse financial system with an adequate emphasis on corporate bonds.
The Financial Stability and Development Council (FSDC) discussed a number of steps to be taken for rationalizing the framework for regulation of corporate debt to remove regulatory constraints for issuers and protect investors, encourage participation of long-term investors, reduce cost of public issuance and increase liquidity through improving the market infrastructure.
The corporate bond market in India is under-developed when compared to other countries. Economic Affairs Secretary Arvind Mayaram has said most countries have developed corporate debt market for funding infrastructure development and India could replicate this by easing the investment norms for pension and provident funds which would provide long-term funds.
According to an official release, the Council reviewed the Eurozone sovereign debt and banking crises and the risks arising out these for the Indian economic and financial sectors.
The panel evaluated various policy suggestions such as moderating imports, promoting exports and encouraging capital flows through progressive liberalisation.
The FSDC was apprised of the progress made by the sub-committee on three broad fronts -- assessing and addressing risks to financial stability, inter-regulatory coordination and issues related to financial inclusion and financial literacy.
Action taken by the sub-committee for putting in place an effective mechanism for supervision of the financial conglomerates, a resolution regime for financial institutions and regulation of investment advisers were noted by the Council.
The FSDC meeting was attended by RBI Governor D. Subbarao, SEBI chairman U.K. Sinha, PFRDA chairman Yogesh Agarwal, IRDA member R K Nair and finance ministry officials.