The Second Tier

A major factor hindering the growth of the debt market is that regulation was never pro-active; it either came later, or, concurrently. The need today is for pro-active regulation. In fact, there are quite a few issues calling for such regulation.

For example, SDs are expected to achieve a portfolio of not less than 20 per cent in gilts in relation to the total assets, within a year of operations after registration. The stipulation of minimum investments with relation to total assets of the SD may be particularly onerous, if the SD is also engaged in other activities in the capital market.

The guidelines state that RBI will facilitate the SDs