Mumbai : Markets watchdog Securities and Exchange Board (Sebi) will soon come out with a consultation paper on making it mandatory for large corporates to meet one-fourth of their financing needs from bond markets.
The move follows the Budget 2018 proposal in this regard, and is aimed at part-funding the huge investments needed in the infrastructure space which is projected at $4 trillion over the next decade, Sebi chairman Ajay Tyagi said.
The move assumes importance as the banking sector is in deep morass following a massive spike in bad loans which is hovering around 12 per cent of the system now. This has made banks, especially the state-run lenders, wary of lending to low-rated corporates, and the resultant spike in the demand for good quality debt papers from corporates.
“The bond market has a huge potential to grow, which will need a robust secondary market. We will soon come out with a consultation paper on making it mandatory for large companies to source a quarter of their financing needs from the bond market. Final guidelines will be drafter in consultation with all the stakeholders,” said Tyagi.
He said this will go a long way in developing a robust secondary market for the debt segment.
It can be noted that the corporate bond market is valued at around $290 billion, which is only around 17 per cent of GDP, way lower than equity market at 80 per cent.
“Given the relatively nascent stage of development of the bond market, such a framework has to be relatively a soft-touch approach, and will be finalised in consultation with stakeholders soon,” Tyagi said while addressing a conference on corporate bond market organised by Assocham.
No proposal received on NSE-MCX merger
MUMBAI: Sebi on Wednesday though the country needs more exchanges, it does not mean that existing bourses cannot merge or consolidate.
Replying to a question whether Sebi has received any proposals from the equities bourse NSE and commodity exchange MCX for a possible merger, Sebi chairman, Ajay Tyagi, said, they have not received any such proposals. Earlier this year Sebi had allowed merger of equity and commodity exchanges under its proposed universal exchanges plan from October this year.
“More players are required, but if economics demands there should be consolidation, then so be it,” Tyagi told reporters.
When contacted, MCX neither confirmed nor denied media reports about it looking for a merger with NSE.