Resource mobilisation in the corporate debt category witnessed a significant decline as just Rs 4,974 crore was garnered through debt issues in the first nine months of the current fiscal, which was not even 10 per cent of the total funds raised during 2011-12 fiscal.

According to the >Economic Survey for the year 2012-13, in the public issue of corporate debt category, only Rs 4,974 crore was mobilised till December 31, 2012, while Rs 35,611 crore was raised in 2011-12 fiscal.

“Though the development of the corporate bond market has been an important area and has received greater policy attention in recent times, it is yet to take off in a significant manner,” the Survey said.

The Government, in close collaboration with the RBI and SEBI, has recently taken a number of initiatives to meet the growing capital needs of the Indian economy.

Bond market

To enhance liquidity in the corporate bond market, the Insurance Regulatory and Development Authority has permitted insurance companies to participate in the repo market. Moreover, mutual funds have been permitted to participate in CDS in corporate debt securities.

Banks were also permitted to take limited membership in SEBI-approved stock exchanges for the purpose of undertaking proprietary transactions in the corporate bond market.

Some of the issues that need to be addressed include development of a more diverse financial system where top-rated corporates access finance from capital markets.

In addition, the legal framework for regulation of corporate debt should be strengthened by necessary amendments in rules/regulations, and relaxation of investment guidelines for pension, provident, and insurance funds to enable the participation of long-term investors in the corporate bond market, the Survey said.

Improving the market infrastructure for enabling liquidity, transparency in price discovery, and stimulating growth in trading volumes also need to be suitably addressed, it added.

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