Free Press Journal

Uniform valuation system in offing for corp bonds


MUMBAI: The Sebi on Tuesday said there is a need for the financial sector to follow one system of valuation for corporate bonds to enhance participation and liquidity in the market. “We cannot have a dichotomous valuation system for corporate bonds,” G. Mahalingam, wholetime member at Sebi, said at an event organised by the Federation of Indian Chambers of Commerce and Industry. Currently, different sectors follow different conventions and practices to value a bond, leading to varied basis for calculation of bond yields. Mahalingam also suggested that other regulatory authorities in insurance and pension funds could allow such entities to invest in slightly lower grade instruments, which could lead to higher activity in the corporate bond market.

Brushing aside concerns over the rupee’s fall, he insisted that the macros of the Indian economy are “really good”.

He also said the regulator is likely to take up a large part of the recommendations of a fair market committee led by former law secretary T.K. Viswanathan. The committee was set up by the regulator to suggest ways to enhance supervision and lower manipulation in the domestic equity market.

“Market should be clean place for common investors to operate in,” Mahalingam said.