Market reform key to unlocking India’s credit markets potential

March 20, 2009: Credit market reform as part of a larger financial reform agenda is key to realising the full potential of India’s credit markets. The need for vibrant debt markets, and the path towards deepening the corporate bond market and the creation of an active secondary market for bank loans, were among the important deliberations at a seminar.

Mr. Ravi Narain, MD and CEO, NSE, said: “The present financial environment has put credit market reform at the top of the financial reforms agenda. We need to find all possible ways to increase the flow of household savings into the debt market. To achieve our real potential for economic growth, we need to make our credit markets flexible.”

Mr. R Ravimohan, MD and Region Head, South and Southeast Asia, S&P, commented “There is a compelling case for trading of corporate credit instruments other than bonds. For instance, trading of bank loans would give banks tremendous flexibility in managing their balance sheets, align lending rates better with bond market yields, and make the bond markets more inclusive.”

Ms. Roopa Kudva, MD and CEO, CRISIL Ltd, elaborated: “Traditionally, the corporate bond market has been accessed only by entities with very high credit ratings of ‘AAA’ and ‘AA’, while entities across the credit spectrum take loans. An active secondary market for loans will, over time, help entities with ratings lower than ‘AA’ to access the bond market directly. Rating of bank loans will go a long way towards standardising practices and creating an enabling environment where loans can be traded with ease."

(This is press release of Crisil)



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