IUKFP: Development of a Corporate Bond Market

This paper is focused on increasing the depth of the bond market in India as well as making it easier for Indian companies to issue bonds overseas.

The requirement to further develop India’s corporate bond market has been widely accepted as an important policy priority in India. This is accentuated in the current environment in which the dominant bank finance market is constrained due to the impaired balance sheets of public sector banks. While the development of India’s bond market has been studied by a number of expert groups in the past, this paper takes a practitioner led view and makes targeted recommendations for policy makers to consider.

It also takes a comprehensive view of India’s bond markets and addresses the onshore Rupee bond market, the Indian securitisation market and the offshore Rupee and foreign currency bond markets. The recommendations cover modifying taxation policy, liberalising regulations that place restrictions on both issuers and investors and increasing the trading liquidity in secondary markets. The paper is focused on
increasing the depth of the bond market in India as well as making it easier for Indian companies to issue bonds overseas. As one of the largest international bond markets, London will remain one of the preferred destinations for Indian corporates to access international debt capital.

We hope that as a next stage both governments, regulators and the private sector will look to discuss the recommendations contained in the paper in detail with a view to identifying specific actions and assigning roles for implementation. The private sector is committed to playing its part in this process. The IUKFP Working Group that helped produce this paper will continue to support and provide input and will be available for specific discussions with practitioners and policymakers. We propose that a review of progress be undertaken by the end of June 2017 and reported to the co-Chairmen of the IUKFP.