Survey suggests creation of corp bonds database

Pitching for a vibrant corporate bond market in the country, the Economic Survey today suggested the creation of a comprehensive database for such bonds.

"With bank finance drying up for long-term infrastructure projects in view of asset liability problems faced by the banking system, the need for further development of a deep and vibrant corporate bond market can hardly be over-emphasised," the Survey tabled in Parliament today said.

In the current fiscal, till November, corporate bonds worth Rs 147,400 crore was privately placed on the Bombay Stock Exchange and the National Stock Exchange.

Apart from creating a comprehensive database for corporate bonds, the Survey has made many other suggestions, including lower and uniform stamp duties across states for these bonds.

Non-banking finance companies are the main issuers of corporate bonds. "The corporate bond market is only about 14% of the total bond market," it added.

As per the Survey, pre-dominance of bank loans, crowding out by government bonds, limited participation of FIIs and lack of investor confidence are among the reasons for the languishing bond market.

"The corporate bond market has languished both in terms of market participation and structure," the Survey noted.

Initiatives taken by the government to develop the corporate bond market include increasing the limit of FII investment in corporate bonds to $20 billion from the earlier limit of $15 billion.