Regulatory support critical to meet this challenge
India's infrastructure and banking sectors will require Rs 10.4 trillion from the bond market over the next 5 years, said CRISIL. To facilitate this, greater regulatory focus is required in three areas - deepening of the bond market, developing innovative credit-enhancement mechanisms for infrastructure projects, and building investor appetite for banks' non-equity capital.It is imperative to build on this foundation of growth and innovation to meet the sizeable funding requirements of the country's infrastructure and banking sectors. Roopa Kudva, Managing Director and CEO, CRISIL, said, "The Rs 10.4 trillion bond funding required for these two sectors translates to an average issuance of Rs 2.1 trillion annually in each of the next five years. This is nearly 60% higher than the average annual issuances made by these sectors in the last three years."
"This calls for steps to deepen the bond market by encouraging greater foreign participation, and by liberalizing investment norms for long-term investors", she added.
Indian banks also seek Rs 3.4 trillion non-equity capital under the Basel III regulations till March 2018. A good beginning is already visible, as five banks have raised Rs 60 billion by issuing Tier II bonds.
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