These are the broad trends in the issuance pattern of privately placed debt during the last three fiscals, the Reserve Bank of Indias (RBI) executive director, Mohammad Tahir, pointed out while presenting a paper on the development of the Indian bond market in Singapore.
Mr Tahir was attending a workshop on the Development of Bond Markets in Asia held on October 17-18, 2002. Of late, there appears to be an increase in private placements by the private non-financial sector, he added. On the development of bond market in India, Mr Tahir touched upon the major issues relating to government debt and the RBIs initiatives on this.
He mentioned about the plan of separating the government debt management from the RBI. However, this would be dependent on the fulfilment of three pre-conditions, viz, development of financial markets, reasonable control over fiscal deficit and necessary legislative changes. The feasibility and further steps for separation of government debt management from RBI is proposed to be taken up once Fiscal Responsibility Bill (which is pending before Parliament) is enacted, he said. Secondly, he added measures to widen the base of the repos market, including extending it to CSGL account holders, introduction of longer term repo, rollover of repos, taxation and standardised accounting are the major areas to be focussed in the near future.
He also mentioned that a feasibility study of a when issued market for government securities (G-Secs), which would help efficient price discovery in the primary auctions had been carried out. There are also plans for order driven screen-based anonymous trading in G-Secs on the stock exchanges, dematerialised holding of all bonds corporate as well as government papers.
He said that although RBIs role in the development of corporate bond market is indirect and is governed by its interest in monetary policy transmission, the RBI along with Sebi, is currently working to devise a regulating mechanism for the issuers of private placements which will address issues of quality, transparency, end-use of funds and listing of such bonds. This is to address the non-transparent practices in this market.