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Our Bureau

Hyderabad , Aug 5

THE chiefs of banks, stock exchanges, depositories, and credit rating agencies have stressed the need to deepen the debt market, especially the corporate debt segment, to effectively address the problems of the financial institutions and markets over the next 15 years.

Addressing a symposium at the Indian School of Business (ISB) on Friday, the Crisil Managing Director and CEO, Mr R. Ravimohan, favoured pushing the subordinated debt instruments with more innovative options.

These instruments, with longer tenures of up to 15 years and flexible repayment options, were needed to augment funds required for the major infrastructure projects in the country.

Mr Ravimohan was of the view that the repayment capabilities of the infrastructure projects would significantly improve with the availability of long-tenured subordinated debt.

Further, such instruments would enable the entrepreneurs to pay back the debt at the earliest.

The NSE Managing Director and CEO, Mr Ravi Narain, said that the current household financial savings at less than two per cent of the total financial market funds were highly inadequate for healthy growth of financial institutions and markets in the country.

He suggested measures to embark upon massive financial literacy programmes to improve the household financial savings level significantly.

Stating that the financial markets were currently growing in isolated boxes, the NSE chief stressed the immediate need for free and smoother flow of assets from different baskets.

Towards this, he favoured an integrated regulatory framework comprising regulators of both securities and money markets.

According to the Citigroup-India CEO, Mr Sanjay Nayar, the country's debt market is currently underdeveloped and requires longer tenure bonds.

He also favoured the setting up of a project guarantee institution towards infrastructure financing in the country.

He said that huge opportunities exist for such debt instruments in the market thanks to its growing household savings levels.

The UTI Bank Chairman and Managing Director, Dr P. Jayendra Nayak, advised the Indian financial services system to improve its technology to aggressively reach out the potential customers across the country instead of focusing only on the urban population.

Not comfortable with the multiple regulatory systems governing the Indian financial services market, he said that such a system would lead to the unhealthy practice of regulatory arbitrage.

He favoured an integrated regulatory framework, especially keeping in view the fact that the country has reached halfway on the road to capital account convertibility.

Expressing apprehensions over the ill-effects of the vastly disproportionate interest rate system prevailing in the country, the UTI Bank chief stressed the need to integrate the formal and informal financial markets at the earliest.

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