Indian debt market may grow nearly four fold to US$ 1.5 trillion by 2016, forecasts ASSOCHAM & PWC

May 09, 2010: ASSOCHAM and PWC have jointly forecast size of Indian debt market including public sector debt grow nearly four fold from current level of roughly US$ 400 billion to US$ 1.5 trillion by 2016 provided 7 key steps are taken to broaden and deepen it.

The proposed measures include minimization of cost of issuance of bonds with effective market making mechanism and thirdly listing norms for corporate bonds be made simpler by permitting their disclosure in abridged version.

Fourthly, a developed trading reporting system should be evolved for bonds with robust trading platform which can go a long way in enabling efficient price discovery for corporate bonds as also help in creating depth and vibrancy in the market.

Fifthly, specialized debt funds for infrastructure financing should be created as recommended by high level expert committee on corporate bonds and securitization and lastly India needs to develop a market for debt securitization apart from reducing stamp duty on debt assignments including bonds.

The ASSOCHAM and PWC are confident that with execution of aforesaid proposals, Indian debt market including public sector debt can go about 55% of national GDP in next 6 years which at current level is estimated at around 45% of India’s GDP.



The recommended measures submitted to Ministry of Finance, RBI and SEBI by ASSOCHAM has emphasized that cost of issuance in term of rating, listing, disclosure and marketing requirements makes the public issue of bond expensive. Therefore, private placement of bonds should be a preferred alternative for most issuers.

If the corporate bond market is to develop, a great deal of attention will have to be given to minimize the issuance cost and the time taken to make public issue. There is need to rationalize and reduce the stamp duty on bonds, feel the ASSOCHAM and PWC.

On the issue of market makers, the two institutions are of the view that they should be encouraged for promoting the corporate debt market. This requires incentivising large financial intermediaries like primary dealers to take up this job. One way is to encourage the investment bankers involved in the placement of the bonds.

About listing norms, the Chamber has stated that for already listed entities, there listing norms could be simpler which should be allowed in an abridged version of disclosure. However, companies which are not listed and which are opting for private placement mode should be subjected to stringent disclosure norms, felt the ASSOCHAM Chief.

>> GO TO PAGE 2



PE investment in SMEs dipped by 68% in calendar 2009
More stock exchanges to ensure wider participation of SMEs and retailers
Form Sovereign Fund to arrest volatility in capital market
BSE, NSE likely to touch 20,000 and 6,000 marks by 2010


FOR SPECIAL SECTION ON SEBI NOTIFICATIONS ...Click Here

FOR STOCK MARKET INDEX's ...Click Here

CLICK FOR MORE FEATURES & STORIES