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

The practice of suspension of trading/delisting of securities in case of non-compliance with listing norms by an issuer needs to be replaced by heavy penalties on the promoters and directors of the erring company, adds the report.

It further emphasizes that a mechanism that captures all the information relating to trades in corporate bonds needs to be develop to keep a data base of trade history. Various regulators should direct the regulated entities to report all the transactions done by them to the trade reporting system.



A robust trading platform would go a long way in enabling efficient price discovery in corporate bonds as also in creating depth and vibrancy to the market. An efficient clearing and settlement system would further the development of corporate bond markets by reducing the counter party risk and settlement risk. As the corporate bond market develops and expands, diversifying and expanding investor interest will need institutional measures for credit enhancement, further feel ASSOCHAM and PWC.

As recommended by High Level Expert Committee on Corporate Bonds and Securitization, there is a case for creation of specialized Debt Funds to cater to needs of the infrastructure sector.

Apart from reducing the stamp duty on debt assignments, pass through certificates and security receipts; the government should also endeavour to resolve the uncertainty in taxation issues pertaining to securitized paper.

Despite some recent successes, the reform effort in India’s development of corporate debt market (DCM) has not yet reached critical mass. Therefore, the authorities should streamline issuance process and make public markets attractive to issuers. They should also strengthen trading platform and settlement and clearing systems and allow securitization of corporate bonds to achieve intended results.

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