• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Mr Pranab Mukherjee

Our Bureau

New Delhi, Aug. 25 Promising that more financial sector reforms are under way, the Finance Minister, Mr Pranab Mukherjee, today said that the Government would soon permit repo in corporate bonds, move ahead to set up an autonomous Debt Management Office, and also come up with a bankruptcy code once a new company law was enacted by Parliament.

As part of the measures to develop the corporate bond market, the Government-RBI Committee on Financial Sector Assessment (CFSA) had recommended that corporate bonds be made repoable (allow repurchase) in a phased manner, rationalise stamp duty, abolish TDS on corporate bonds, and also have timely, efficient bankruptcy procedures.

Corporate debt accounts for 72 per cent of the total resource mobilisation by the corporate sector.

The CFSA, whose report was submitted to the Finance Minister earlier this year, had also suggested the consolidation of all the separate laws dealing with insolvencies into a single, uniform and comprehensive bankruptcy code with a common forum, irrespective of the entity involved in such process. However, it is the RBI’s view that there should be a separate insolvency law for banks.

“In the financial sector, reforms that facilitate greater mobilisation of investible resources are under way. In several areas, reforms are partly done like measures taken to promote corporate bond market,” Mr Mukherjee said at an event organised by a private TV channel here today.

Allowing repurchase transactions in corporate bonds could address liquidity concerns of investors. In India, the corporate bond market has not taken off so far, largely because of lack of buying interest, poor transparency and an absence of pricing of spreads against the benchmark yield curve, according to the CFSA report.

The BSE and NSE had in July 2007 put in place corporate bond trading platform to enable efficient price discovery in the market. Trading in corporate bonds increased significantly in 2008-09 to Rs 1,48,747 crore from Rs 96,119 crore in 2007-08.

More Stories on : Debt Market | Corporate Bonds | Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line