India's Bond Market-Developments and Challenges Ahead
AbstractWhile India boasts a world-class equity market and increasingly important bank assets, its bond market has not kept up. The government bond market remains illiquid. The corporate bond market, in addition, remains restrictive to participants and largely arbitrage-driven. Securitization, which once had the jump on other Asian markets, has failed to take off. To meet the needs of its firms and investors, the bond market must therefore evolve. This will mean creating new market sectors such as exchange-traded interest rate and foreign exchange derivatives contracts. It will mean relaxing exchange restrictions, easing investment mandates on contractual savings institutions, reforming the stamp duty tax, and revamping disclosure requirements for corporate public offers. This paper reviews the development and outlook of the Indian bond market. It looks at the market participants-including life insurance, pension funds, mutual funds and foreign investors-and it discusses the importance to development of learning from the innovations and experiences of others.
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Bibliographic InfoPaper provided by Asian Development Bank in its series Working Papers on Regional Economic Integration with number 22.
Length: 56 pages
Date of creation: 01 Dec 2008
Date of revision:
India; emerging East Asia; bond market; securitization; collateralized borrowing and lending obligations (CBLO);
Find related papers by JEL classification:
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-31 (All new papers)
- NEP-CWA-2009-01-31 (Central & Western Asia)
- NEP-DEV-2009-01-31 (Development)
- NEP-LAW-2009-01-31 (Law & Economics)
- NEP-SEA-2009-01-31 (South East Asia)
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