Primary Mkt Panel Discusses Rbis Prop-Up Proposals

The primary market advisory committee, under the chairmanship of chief economic advisor Shankar Acharya, held the second among a series of meetings to suggest measures to pep up sagging sentiments in the primary market.

The committee discussed various issues, including a Reserve Bank proposal, to revive the primary market. The RBI has proposed a ban on private placements prior to regulating this segment. It has also proposed the imposition of debt-equity norms to regulate private placements.

Though no decisions were taken at the meeting, the committee will meet again during the forthcoming weeks to finalise its recommendations. The recommendations will be placed before the High Level Committee (HLC) on capital markets for consideration.

 

The primary market advisory committee is an informal panel set up by the HLC to assist it in its effort to revive the capital markets. The HLC is chaired by the RBI governor and includes the Sebi chairman and the finance secretary as members.

The need for regulating the private placement market has become an issue in the wake of over Rs 21,000 crore being raised through this route during the first three quarters of the year as against only Rs 1,400 crore being raised through the primary market during the same period.

There has been a feeling in the government that if issuers shun the primary market in favour of the private placement route, it could be primarily on account of the lack of regulations governing this segment.