MF industry hopes of deepening of corp bond market under Rajan

Mutual Fund managers expect the Reserve Bank to have a fresh approach to the monetary policy under the new governor Raghuram Rajan and hope that corporate bond market would deepen under his leadership.

"We expect that the corporate bond market would be deepened under the new governor. During (the term of) Governor Subbarao, repo trade was introduced in the corporate bond market but the market is not deep. We hope that this will be deepened," Head of Fixed Income of Sundaram Mutual, Dwijendra Srivastava told PTI here.

He also said that as in the government securities market where trade is settled electronically, CP and CD market should have similar facility, to bring transparency.

Raghuram Rajan today took over as the 23rd Governor of the Reserve Bank of India amid a tough economic environment.

Fund managers expect the new governor to do a balancing act between growth and inflation.

"We hope that he will bring a different approach to the monetary policy and also do a balancing act between growth and inflation," Chief Executive of Association of Mutual Funds in India, H N Sinor said.

"Market appears to be cautious....If he is able to show growth, market will respond," Chief Executive Officer of LIC Nomura Mutual Fund Nilesh Sathe said.

Another fund manager from a large fund house said that the new governor should bring back growth as its top priority.

"Reserve Bank should create a yield curve which is rational. You can't have negative returns in the fixed income market and expect retail investors to come in," the fund manager said, wishing not to be named.

He also said the onus of deepening the corporate  bond market lies with the Reserve Bank, which should create an enabling environment.