The issue was discussed at a meeting jointly called by the RBI and the Securities and Exchange Board of India (Sebi) on Wednesday to discuss various technical and operational issues relating to the draft listing agreement issued by the markets regulator.
According to market sources, banks and mutual funds, both being major investors in corporate bonds and debentures, have been asked to force corporates to list their bonds if they want to participate in the funding programme through bond and debenture issues.
Besides, various difficulties relating to the new listing norms were also discussed at the meeting. An informal consensus also emerged at the meeting that open-ended schemes of mutual funds will be out of the purview of the 20 per cent ceiling on investment in unlisted papers, banking sources added.
Market sources said a common forum was proposed so as to reduce the confusion regarding various regulatory issues related to corporate bonds.
In the corporate bonds market, Sebi regulates investments by mutual funds, while RBI regulates investments by financial institutions and banks.
According to sources, different regulatory guidelines are creating operational anomalies in the bond market.
Banks, mutual funds, fixed income dealers and stock exchange officials attended the meeting. According to sources, listing will enable better price discovery and transparency in trading.
In fact, the RBI is understood to have advised banks to stay away from unlisted bonds and debentures even if they have a leeway under the 10 per cent relaxation.
As per the RBI guidelines, banks will be allowed to invest in unlisted bonds to the extent of the 10 per cent their total non-statutory liquidity ratio (SLR) portfolio. They have been given time till March 31, 2004, to comply with the revised norms.
They have been further advised to stay away from unlisted bonds even after the deadline if they have not been able to pare their non-SLR exposure to 20 per cent of their total portfolio.
