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RBI eyes larger corporate bond market

Monday 4 April 2011 - by Will Henley

The Reserve Bank of India has signalled the country's intent to boost its corporate bond market through insurance and pension reforms.

Executive director Deepak Mohanty told a conference of central banks in Israel that an increase in the take-up of corporate bonds is an "important" step for the country.

"Well functioning and liquid local bond markets cope better with shocks and the risks stemming from frozen credit markets," Mohanty said.

The executive director noted that the Reserve Bank and the Securities and Exchange Board of India have already taken steps to develop the local bond market, but added that more reforms were on their way.

He continued: "Limits on foreign investment in local currency bonds have been progressively liberalised.


"It is expected that further reforms in insurance and pension segments of the financial sector alongside fiscal consolidation will spur demand for corporate bonds.

"As India has a huge need for infrastructure development, the expansion of corporate bond market becomes important."

Mohanty was speaking at the central banks conference hosted by the Bank of Israel in Jerusalem on Friday.


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