The report of the Working Group on Development of Corporate Bond Market in India (H R Khan report) makes several recommendations on different aspects of the bond market in India. Most of the steps recommended have been tried before, in various forms. However, it makes two new recommendations. One, that foreign portfolio investors (FPI) must be allowed to invest in unlisted bonds issued by Indian entities and not only infrastructure companies, as is currently the case. Two, it recommends that FPIs to be allowed to invest in pass-through certificates issued by securitisation vehicles. These two reforms were largely overdue. However, even these two new recommendations do not address the three fundamental problems that shroud foreign investment in the Indian debt market.
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