Addressing the 20th anniversary celebrations of the National Stock Exchange of India Ltd (NSE), the nation's largest bourse and one of the top five in the world, P. Chidambaram also said, "Standards set by NSE are a benchmark not only to other exchanges but to all the capital markets across the world."
There is an urgent need to increase retail participation and I look forward to seeing the number of demat account holders grow from 1.6 crore to 15 crore, P. Chidambaram said.
NSE Managing Director and Chief Executive Officer Chitra Ramakrishna said over the past two decades, the exchange has lived up to expectations with which it was launched.
"For the NSE to have had the opportunity to be an instrument of reform, if NSE has claimed its space amongst the top few exchanges in the world, a lot of that credit will go to the reform process, visionaries in the industry, Sebi and other regulatory bodies, stakeholders, market participants, many of whom are present today, and the list is long," she said.
She said the domestic market has lofty goals as it becomes a gateway to the Asian region and the best in the world, but admitted this path is paved with challenges.
"It requires us to be competitive, whether it is in ease of doing business or forms of doing business, reforms like the FSLRC (Financial Sector Legislative Reforms Commission) create the platform for the next wave of changes," Ramakrishna said.
Securities & Exchange Board of India (Sebi) Chairman U K Sinha congratulated NSE for its achievements.
"NSE is a symbol of confident India, ready to take up all the challenges that emerging global economies are going to pose to us," he said.
NSE Vice Chairman Ravi Narain said, "Our chosen strategy was high standards of governance, transparency and innovation through technology. NSE brought a new business model and governance model, enthusiasm and the ability to take risks, but above all, with a sense of purpose."
Former NSE chairman S B Mathur, former Sebi chairmen G N Bajpai and M Damodaran, SBI Chairperson Arundhati Bhattacharya, BSE Chief Ashish Chauhan (who is an ex-NSE personnel), HDFC chief Deepak Parekh and Godrej Group Chairman Adi Godrej were among those present.
Cozy ties between banks & cos impeding corporate bond mkt: FM
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.
PSU banks themselves responsible for NPAs, not govt: FM
Blaming "tardy" state-run banks for high level of non-performing assets, Finance Minister P Chidambaram today said banks' boards and not the government should be held responsible for the situation.
"If the bank boards cannot perform their duty, blame should stop with the bank boards and not with the government," he said at a panel discussion at an event to commemorate NSE's 20th anniversary here.
He acknowledged that the government has a nominee director in every public sector bank, but pointed out the roles of the independent directors, full-time directors, chairmen and managing directors and senior bank management.
During his three stints in the finance ministry, running into eight years, he has never interfered with the working of a bank, Chidambaram said.
"NPAs are high because the recovery measures are soft. Bankers are being tardy and to some extent soft on recovery. We have failing companies and prosperous promoters," he said.
Gross NPAs of banks crossed 4 per cent as of the September quarter at Rs 2.37 trillion and are projected to cross 4.4 per cent or Rs 2.9 trillion by the end of the fiscal, according to a report by rating agency Icra. Most NPAs are being generated by the state-run banks. United Bank of India has an NPA level of over 7 per cent, while SBI has over 5 per cent NPAs.
The minister also said that the RBI and the government have taken serious note of the issue and asked banks to expedite recoveries aggressively. State Bank has set up a separate vertical to tackle NPAs, he noted.
Chidambaram also said it is not fair to compare NPAs in the current context with the levels of the past, as in 2004, when the numbers were lower.
On capital infusion in state-run banks, Chidambaram said the infusion will continue even as bad assets rise because of the rate at which the overall assets of the banks are growing.