An essay on corporate debt market in India

Abstract

Both in terms of microstructure and market outcomes, it can be said that the Indian corporate debt market in India is in its infancy. Very small amount of funds are raised by manufacturing and service concerns and it is primarily NBFCs that are dominating the issuance of debt papers in the primary markets.Still its bank loans that are most sought after by these concerns to fund their investment requirements. As a consequence of this sluggishness in the primary markets, secondary market activities have also not picked up. Efforts of market regulators (SEBI) and the stock exchanges to bring the trading in debts to stock exchange platforms have also gone futile without creating the desired impact. However this is only one side of the story- On the other hand we do the government debt market that has shown exponential growth during the preceding few years due to many initiatives and structural changes introduced by the GOI in consultation with Reserve Bank of India. Having got the helicopter view of the status quo of the Indian bond markets and before going into thedetails of the road map, required appropriate policy initiatives, and the necessary reform steps to be taken to build a thriving debt market in India, we thought it would be prudent if we try to broadly understand the structure and main characteristics of the global corporate debt markets and draw few lessons from them.