RBI Will Shortly Evolve Bankruptcy Code And Guidelines To Deepen Bond Market: S S MUNDRA

The Reserve Bank of India (RBI) would shortly evolve and finalize suitable guidelines for putting in place bankruptcy code as well as directives for deepening the bond markets as the working committee has been intensely working on the twin issues, according the Deputy Government of RBI Mr. S S Mundra.

Delivering his key note address at a Summit on Financing India's Growth: Way Forward under aegis of PHD Chamber of Commerce and Industry, the Deputy Governor ruled out possibilities for guidelines to institutionalize development finances (DFIs) through state mechanisms that were in vogue earlier.

On the contrary, Mr. Mundra advised that development finances to fund long term mega infrastructure projects should be arranged for through market sources and pumping good equity in them by their promoters themselves instead of DFIs route.

The time has come for directives to ensure deepening of bond markets to raise capital for long term infrastructure projects and bankruptcy code to bring about a sound discipline for borrowers for obtaining humongous size of capital from financial institutions with covering their risks factor and the committee in the RBI has been actively acting on these two issues, said Mr. Mundra adding that borrowers should be made aware and accountable for their obligations.

He, however, did not give any particular time limit by when such guidelines would be put in public domain, barring adding that it would happen shortly.

Mr. Mundra further added that the RBI would continue to address the issue of inflation and try to maintain its equitable balance with the issue of growth without largely commenting on the issue of reducing the interest rates.

According to him, there should be a fair balance for allocation of finances by banks and financial institutions towards capital intensive and labour intensive industry units as it would eventually lead to meaningful growth for which the entire system is working in tandem with all stakeholders.

Chairman & Managing Director, Export Import Bank of India Mr. Yaduvendra Mathur in his observations demanded revival of institutions that would extensively support developmental finances and in the new age economy such institutions were systematically decimated. Institutions that can undertake long term financing to support projects leading to growth be encouraged was the key point Mr. Mathur was pitching for.

In his welcome remarks President, PHD Chamber Mr. Alok B. Shriram made a strong argument for MSMEs segments of India Inc. to enable it access capital at cheaper rate of interest as on account of its non-availability, India has not been able to realize the potential of MSMEs both in terms of volumes and exports.

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