• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Suggests participation of investors with "deep pockets" in debt markets

SMILING SUMMIT: Mr M. Damodaran (centre), Chairman, SEBI, with Mr K.P. Krishnan, Joint Secretary (Capital Markets), Ministry of Finance (left), Mr Rajnikant Patel, Executive Director & CEO, BSE, and Mr Nimesh Kampani, Chairman, JM Financial Group, at a capital markets summit in Mumbai on Wednesday. - Paul Noronha

Mumbai , Sept. 27

While infrastructure financing does not depend entirely on the growth of the bond market, it provides an excellent opportunity to drive its development, said the SEBI chief, Mr M. Damodaran, at the CII-Capital Markets Summit on Infrastructure Financing in Mumbai on Wednesday.

He said while there is a roadmap in place, what is missing is its execution. He said policy issues on corporate debt financing should be ironed out soon.

According to the SEBI chief, cesses could be on the high side if the bond market route is not used for infrastructure financing. In the process one should ensure that there is no artificial segmentation of the market, he added. The SEBI chief also said that there was a need to devise new instruments and products without government guarantees.

He mooted participation of investors with "deep pockets" to add depth to debt markets.

Corporate debt

Speaking on the occasion, Mr K.P. Krishnan, Joint Secretary (capital markets), Finance Ministry, said there is a growing demand for long-term money. "There are a whole lot of interested entities who are waiting to enter this segment. A thriving corporate debt market with a longer tenure would go a long way in allowing them entry," he said.

"Today the corporate bond market in India is less than 5 per cent of India's GDP. The bulk of it is raised through private placement with more than two-thirds raised by financial institutions. There is an absence of long-term investors. As such policies need to be revisited. Currently, institutions dominate market," he added.

In his address, Mr Rajnikant Patel, Executive Director and CEO, Bombay Stock Exchange Ltd, said there is a need to develop corporate debt markets as they account for only 10 per cent of the equity market as against the international norm where debt markets are bigger than equity markets.

Mr Nimesh Kampani, Chairman, JM Financial Group, said that the CBDT decision to tax accumulated interest was an impediment to the growth of the corporate bond market.

"The investor base needs to be widened. We have to raise the exposure limits for pension funds and insurance companies in the corporate debt market as they are long-term investors," he added.

More Stories on : Events | Debt Market | Corporate Bonds | Infrastructure | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Exit spectre haunts MFs

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line