Corporate Bond Market in India: Current Scope and Future Challenges
The capital market of an economy is considered to be well developed, only when a parallel development is ensured both in the equity and the debt segment. There is no doubt that the equity market in India is quite well developed and plays a crucial role in the growth of Indian economy. At the same time, Govt. debt market in India has also experienced a tremendous growth in the last decade. But unlike Govt. bonds, the corporate debt segment in India is still in the nascent stage and requires lot of initiatives to bring it to the Global standard. Bonds of different tenors issued by Central or State Governments and other PSUs capture more than 80 percent of the total debt market volume in India. Therefore, it has become very important to have a well run and liquid corporate bond market that can play a critical role in supporting economic development in India, both at the macroeconomic and microeconomic levels. Massive future growth in infrastructure, as required to achieve the higher GDP growth, can only be ensured through availability of long-term financing and also at a reasonable cost. Due to several issues, applicable to several market players, bank financing is not the right choice to meet all the financing needs to facilitate such growth. A well developed corporate bond market can be the optimal alternative, not only to support the financing requirement for infrastructural development, but also to relieve banks from all the problems of long-term financing, and spreading out the huge financing risk to a wider investor base to strengthen India’s bank-based financial system, to allow corporate borrowers to tap the low cost market, to enable investors including FIIs to earn fixed but higher returns, and above all to ensure overall growth of the economy. The present study analyze the existing structure of Indian corporate bond market, vis-à-vis the other developed markets, and attempted to explain the movements and changes taken place in Indian debt market during the last decade, may be as a result of several regulatory initiatives. The importance of an well developed corporate bond market for various groups of Indian financial sector, followed by the important factor contributing to the inferior growth of such market, supported by several facts and figures, are discussed in the study. It has been finally observed that, even if some changes have taken place to strengthen Indian corporate debt market, the market has a significant scope to contribute to the overall growth of Indian economy, but obviously subject to some very important and stringent initiatives from the Government and the concerned regulatory bodies.
|Date of creation:||15 Jun 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mahmood Pradhan & Shanaka J Peiris & Mangal Goswami & Dulani Seneviratne & Joshua Felman & Andreas Jobst & Simon T Gray, 2011.
"Asean Bond Market Development; Where Does it Stand? Where is it Going?,"
IMF Working Papers
11/137, International Monetary Fund.
- Joshua Felman & Simon Gray & Mangal Goswami & Andreas A. Jobst & Mahmood Pradhan & Shanaka Peiris & Dulani Seneviratne, 2014. "ASEAN-5 bond market development: Where does it stand? Where is it going?," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 28(1), pages 60-75, 05.
- Jacob Gyntelberg & Guonan Ma & Eli M Remolona, 2005. "Corporate bond markets in Asia," BIS Quarterly Review, Bank for International Settlements, December.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:42478. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.