FSDC deliberates on ways to deepen corporate debt market
New Delhi: A high-level panel of financial sector regulators headed by Finance Minister P Chidambaram on Saturday discussed steps required to promote corporate bond market to help India Inc access long-term funds.
"The council (FSDC) also discussed a number of steps to be taken for rationalising the framework for regulation of corporate debt with an aim 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," an official release said.
While India has a very advanced G-sec (government securities) market, corporate bond market is relatively under-developed.
A developed corporate bond market provides additional avenues to corporates for raising funds in a cost-effective manner and reduces reliance of corporates on bank financing.
"Steps to improve corporate bond markets were discussed. Some decision has been taken to improve corporate debt market," Pension Fund and Regulatory Development Authority Chairman Yogesh Aggarwal said after the meeting of Financial Stability and Development Council (FSDC) here.
However, he said there was no discussion with regard to relaxation in investment norms of pension fund.
The statement further said there was discussion on the the need for a roadmap for a structural shift towards a diverse financial system with an adequate emphasis on corporate bond instruments.
Besides, the steps taken so far towards developing the corporate bond market were reviewed at the fifth meeting of the FSDC attended by RBI Governor D Subbarao, SEBI Chairman U K Sinha, PFRDA Chairman Yogesh Agarwal, and IRDA Member R K Nair.
Department of Economic Affairs Secretary Arvind Mayaram, Department of Financial Services Secretary D K Mittal and other senior officials of the Finance Ministry were also present at the meeting.
While reviewing the global economic situation specifically in the Eurozone and the US, the council assessed the external sector vulnerabilities as also risks arising out of the same.
Recent steps taken by the government and the financial sector regulators to address the concerns were briefly discussed, it said.
It deliberated on various policy suggestions on mitigating the vulnerabilities through moderating imports, promoting exports and encouraging capital flows through progressive liberalization, it added.