Indian Corporate Bond Market Smaller Than In Other Asian Economies: RBI Deputy Guv

The Indian corporate bond market is large and growing; the issuer base is expanding; product diversity and sophistication are developing and market infrastructure is the best in the world, said T. Rabi Sankar, Deputy Governor, Reserve Bank of India (RBI) on Wednesday

While speaking at the Bombay Chamber of Commerce and Industry, Sankar said that India has made impressive progress in the development of the corporate bond market.

"The size of the corporate bond market in India, scaled by GDP, remains small compared to other major Asian emerging markets such as Malaysia, Korea and China," he said. 

However, Sankar added that the market is growing steadily and reasonably given the traditional bank dominance.

"Efforts need to focus on improving complementary– repo and derivative – markets, diversify the investor base, both domestic and global, and improve access of borrowers at the lower end of the credit spectrum," he mentioned. 

Beyond this, market development and improvements will remain a continuous exercise, he said and added, "As much as we need to take these steps, it will serve us well to temper our expectations on the degree of liquidity in secondary corporate bond markets."

He also said that if the international experience is anything to go by, the best we can achieve may be well short of the liquidity we are used to in government bond markets or equity markets.

The growing size of the corporate bond market is accompanied by the growing diversity of issuers and markets. 

There are other factors which testify to the development of the corporate bond market in the country and to its increasing resilience, he said. 

"A well-developed government securities market provides the backbone for the development of other rate markets such as the corporate bond market," Sankar stated.