Finance Minister P Chidambaram today blamed the "cozy relationship" between corporates and bankers for the under-developed corporate bond market in the country.
"I think the corporate bond market is not developing because corporates think that banks are ready to lend them money and the banks indeed are ready to give them money .... Banks and corporates have entered into a very cozy relationship," he said, speaking at an event to commemorate the 20th anniversary of NSE here.
"If only the bank says no to corporates, they will be forced to go to the bond market," he said, adding such a working is "unheard of" in a developed market.
Reacting to the minister's comments, SBI chairperson Arundhati Bhattacharya said top-rated corporates get their funding from the commercial paper (CP) market and it is only the lower-rated companies which come to banks.
"We were telling time and again that the better-rated corporates don't come to the banks for working capital, they go to the CP market. It is only the persons who cannot access those bond markets, they come to us," she said.
She also said the mandate of insurance companies and provident funds to invest only in high-rated companies makes it harder for a lesser rated corporate to raise money via bonds.
According to a November 2013 study by ratings agency Crisil, corporate bonds accounted for only 21 per cent of the overall outstanding debt of Rs 62 trillion in the country with the rest being fully controlled by the government securities market.