Tyagi wants a robust corporate bond market
India faces the challenge of developing a bond market adequately to achieve the Government’s target of Rs.100 lakh crore investment in infrastructure by 2024-25.
“It would be a challenging task to achieve the Government’s target of achieving Rs 100 lakh crore investment in Infrastructure by 2024-25 unless the bond market is adequately developed,” said Ajay Tyagi, chairman of the Securities and Exchange Board of India (SEBI).
The corporate bond market needs to become more robust because there is an urgent need to diversify funding requirements from the banking sector, the Chairman told a financial market summit on 21 Oct 2020.
The SEBI Chair also acknowledged that illiquidity in the bond markets was an issue and that it needed long-term solutions.
But he noted that the recovery in capital markets has been broad-based after being initially hit by the COVID-19 pandemic.
“We have observed that recovery has been broad-based. It is not only the large cap, but the mid and small cap shares have also recovered since the lows hit in March 2020,” Tyagi said at the inaugural session of the 11th edition of the CII Financial Markets Summit held 21-22 October 2020.
While elaborating on the theme of one of CII’s flagship events this year, the Chairman pointed out that it is a misconception to think that reforms could take place only when there was a problem with the existing system or that reform only means radical changes by Government or the Regulators.
Reforms, he added, was not just limited to fixing a broken structure but also includes incremental changes.
He further iterated that SEBI’s approach towards reforms has been progressive, openminded and forward-looking.
The Chairman also addressed the increase in independent directors’ resignations in the last two years and urged them to come forward and flag concerns if related to corporate governance.
Speaking about the role of other stakeholders in reforms, the capital markets regulator said that all stakeholders need to play an equally important role towards the reformation of the financial markets.
“While I talked about the reforms brought in by SEBI, it backs the question as to why the term ‘reform’ is almost always been associated with the Government or the regulators.
“We believe that other stakeholders need to play equally important role in reforming the financial markets,” said Tyagi.
“Reforms in the securities market need to focus on fundamentally encouraging delivery-based customers, who buy on a cash basis,” added CII President Uday Kotak at the inaugural session.
“SEBI has taken many steps to support the broking industry and improve the quality of the broking industry. Simplification of account opening through e-KYC (electronic know your customer) is a true game-changer for broking, depository participants and mutual funds businesses,” said Kotak.
On the Listing Obligation and Disclosure Requirement (LODR) guidelines for listed companies, Kotak asked SEBI to look at how it can ease areas for promoters’ reclassification.
He also suggested SEBI review Open Interest limits, particularly for large institutional investors, which were put in place in March.
“Indian savings and offshore savings need to channelized for productive investments which can create our dream of India,” added Nilesh Shah, Chairman of the CII National Committee on Financial Markets.
Any reform now would require investments and without investments, it would not be possible to turn around growth, said Shah. #bonds #investment #banking #financial /fiinews.com
