Sebi chief calls for common BRICS bond market

Looking to deal with challenges surrounding debt securities trading, the Securities and Exchange Board of India (Sebi) Chairman U K Sinha on Tuesday pitched for developing a unified BRICS — Brazil, Russia, India, China and South Africa — bond market for the benefit of all the member countries.

"BRICS countries have created New Development Bank to foster a collective growth path and now the time is ripe to think of sharing the experiences in developing the bond markets and create an exclusive BRICS bond market," Sinha said in Mumbai.

He was addressing a seminar on challenges in developing the bond market in the BRICS, organised by the Ministry of Finance and the Confederation of Indian Industry.

Sinha identified issues such as reliance of long term borrowers on banking sector, banks offering better instruments like cash credit and overdraft facilities and lack of adequate tax sops as challenges for developing a robust bond market.

He also said there is lack of interest from foreign portfolio investors in the bond market.

Department of Economic Affairs Additional Secretary (Investment) Ajay Tyagi said there is enough potential among the BRICS nations in terms of bond markets.

"In India, the government, in consultation with the RBI (Reserve Bank of India) and the Sebi Is initiating measures to further deepen and reinvigorate both primary and secondary market segments of the corporate bond market," Tyagi said.

In another session, RBI Deputy Governor R Gandhi said the time is ripe for municipal corporations to look beyond conventional sources of financing.

"With the rising urban population, demand for urban infrastructure is picking up pace. To meet this enhanced financial requirement, the municipal corporations have to look beyond conventional sources," he said.

Since July 1, 2016, BSE bond platform has become operational for privately placed debentures. The amount raised on the platform is Rs 38,092 crore till date. Public issue of bonds in same period is Rs 19,700 crore. With this, the total amount comes to Rs 57,792 crore.

This has happened post the new Sebi and RBI regulations promoting the corporate bond market for large corporates.