MUMBAI: TO deepen bond markets and make corporate bond issuances easier, and to be able to track G-Sec yields, SEBI chief Ajay Tyagi has called for unification of the corporate bond market with the government securities market. Since corporate bonds are generally priced on the basis of the G-Sec price, Tyagi said there was a need to address the issue of having a continuous government bond yield curve.
Speaking in an industry event, Tyagi said one way to achieve seamless transmission of information from the G-Sec to the corporate bond market which follows the G-Sec yields was to bring trading of both on the same platform, clearing and settlements allowing for seamless transfer of G-Sec and corporate bond holdings.
“In addition to unification of the bond market, another desired goal should be to encourage retail participation in G-sec. The announcement made by the Hon’ble Finance Minister in this year’s Budget relating to inter-operability of RBI depositories and SEBI depositories, would facilitate this,” Tyagi said.
While funds raised from corporate bonds rose from Rs 3.7 lakh crore in 2012-13 to Rs 6.5 lakh crore in 2018-19, they have remained flat in the last three years at an average Rs 6.4 lakh crore, Tyagi pointed out. Bank credit, on the other hand, declined from Rs 13 lakh crore to Rs 11 lakh crore during the same period.
“The plateauing of corporate bond issuances and declining bank credit disbursements by banks are inextricably linked to the decline in corporate private investments, resulting in sluggish growth seen in various sectors of the economy,” Tyagi said. Therefore, in order to boost economic growth, all means of financing, including bond issuances, have to increase, he emphasised.