India's bond market continues to demonstrate significant growth, with bond issuances surpassing USD 105 billion in the fiscal year 2024. Alongside, new equity issuances amounted to USD 25 billion, underscoring the robust depth and potential of the Indian bond markets, according to Pramod Rao, Executive Director of the Securities & Exchange Board of India (Sebi).
Speaking at the 7th National Summit and Awards on Corporate Bond Market organised by Assocham, Rao emphasised Sebi's ongoing efforts to further deepen the market for debt by raising the RFQ (Request for Quote) trading thresholds. "We are also examining proposals to expand thematic bonds to include social sustainability, sustainability-linked bonds, securitized debt instruments, and municipal bonds," Rao added.
Rao highlighted Sebi’s commitment to sustainable finance, mentioning that the introduction of the "once listed, always listed" norm for corporate bond issuers is aimed at ensuring continuous engagement with the bond market. He also noted advancements in Distributed Ledger Technology (DLT) to bridge information gaps between issuers and debenture trustees, fostering greater transparency.
Sebi’s dedication to creating a supportive market infrastructure was further evidenced by the recent formation of AMC repo clearing in collaboration with the Reserve Bank of India (RBI). This initiative has already seen transactions exceeding Rs 10,000 crore within its first year, and Sebi expects participation to grow as awareness increases.
R Doraiswamy, Managing Director of LIC of India, also emphasised the importance of the corporate bond market, particularly in democratising financial growth and supporting national development. Doraiswamy pointed out that the convergence of interests between the insurance industry and the bond market is critical to mutual growth.
Adding to the discussion, Pradeep Ramakrishnan, Executive Director of the International Financial Services Centres Authority (IFSCA), underscored the flexibility of raising bonds through the IFSC platform. He clarified that companies need not be physically present in the IFSC to raise bonds, which can be done from any part of the world, especially for borrowing in foreign currency. Ramakrishnan also hinted at forthcoming regulations that will allow Indian companies to list their equity outside the country, potentially boosting international participation.
Dimple Bhandia, Chief General Manager of the Reserve Bank of India, highlighted the significance of a well-developed corporate bond market in spreading risks and contributing to financial stability. She mentioned that recent measures by the RBI and other regulators have enhanced market transparency and consolidated the corporate bond market, which now accounts for 60-67 per cent of the corporate lending book of banks.
The summit also featured a panel discussion on the "Role of Corporate Bond Market in the Development of Renewable & Infrastructure Financing," where industry experts discussed the potential and challenges of using corporate bonds as a funding source for large-scale infrastructure and renewable energy projects in India.
In her closing remarks, Aditi Mittal, Co-chairperson of the Assocham National Council for Corporate Bond Market, praised the consistent growth of India's bond market, attributing it to the efforts of policymakers and regulators. She emphasised the bond market's critical role in India's journey toward becoming an economic powerhouse by 2027-28, serving as a dynamic force supporting ventures across various sectors.
_20240428142749original_image_31.webp)
