The government and financial sector regulators are finally moving on to reform and develop the corporate bond market.
The high-level co-ordination committee on financial markets (HLCCFM), comprising regulators and senior finance ministry officials, met today and discussed a schedule for the oft-proposed reforms, in the pipeline for several years. “The HLCCFM reviewed the recommendations made by various committees and market participants, measures taken so far for developing the corporate bond market and the way forward,” the Reserve Bank of India (RBI) said.
“It was a free-flowing, intellectual discussion,” said an official who was present at the meeting. According to sources, RBI was asked to prepare the road map for strengthening the domestic bond markets to enable Indian companies access funds from non-bank sources. At present, banks meet most of the debt requirements of companies. With access to long-term funds limited, many lenders have reached the exposure cap to corporate houses, impeding the flow of funds to infrastructure.
RBI would present a working paper to the HLCCFM, but no time frame had been fixed, the sources said. The paper would address the issues raised by a host of expert committees. While lowering of stamp duty by state governments is often cited as a big impediment, the expert committees have also identified other roadblocks.
A committee under Raghuram Rajan had even raised the issue of regulation and made a case for the Securities and Exchange Board of India to regulate the market.
