Patil Lauds Nse Debt Segment Showing

This, he said, is a significant development, especially because this segment will be a key source of funds to be ploughed into the infrastructure sector.

Patil said trading volumes in the debt market, which hovered at very low levels in June 1994, surged to an average of $80 million in October 1996.

The volumes are still small compared to the size of the market but the growth is a good sign, he said.

He pointed out, however, that activity is concentrated only in select scrips.

According to an NSE study, only 20 scrips account for nearly 61 per cent of trade in the debt market while 87 per cent of the total trade takes place on Central government paper.

 

Patil said Indian banks are relatively inactive in the debt market, accounting for just 26 per cent of the trade against the foreign banks involvement in 38 per cent of the trade. Financial institutions account for only 6 per cent.

He said wholesalers must enter the debt market to give it liquidity, the absence of which would cause problems for the participating institutions. They would find it difficult to enter and exit the market, he observed.

The NSE managing director said money market mutual funds and foreign institutional investors must also enter the market to lend it depth.

He said trading in the debt market is plagued by the dichotomy of business being conducted through both telephones and screens.