The Additional Secretary (FM) of the Department of Economic Affairs in the Ministry of Finance believes that there is a lot of work that needs to be done on the bond markets in India and the Government and all the other major participants of the financial markets are constantly deliberating steps to develop the Indian bond market.
"We need to do a lot of work on the bond market. Government and all the major participants are continuously in dialogue to do more and more to develop our bond market," said Shri Anand Mohan Bajaj, while addressing a special session at the 12th CII Financial Markets Summit. Shri Bajaj also iterated that Government is considering a backstop facility for Corporate Bonds which would also be available during non-stress times.
Shri Bajaj added that "if Indian financial markets had to be better facilitators, market makers and partners in economic development, they should have the basic characteristics like depth, ease of access, efficiency and stability, less volatility to market shocks, etc."
The Additional Secretary was optimistic on the Indian financial markets and stated that "the financial markets in India have performed well beyond the expectations of market participants. Continuous functioning of Financial Markets even during COVID is a testimony of technology and resilience".
On the various efforts being taken by the Government to improve the efficiency of the financial markets, the additional secretary explained, "rationalized single securities market code, as announced during the Budget 21-22, would be forward looking and we need to have the best securities law framework. Government is working on providing the best securities law framework in India, to enhance efficiency and provide lubrication to the functioning of the markets.”
On the credit default swaps the additional secretary remarked, "the credit default swap is a very important product and RBI and the Government have now reached a stage where credit derivatives may be used to reduce the capital required and to support the credit risk exposures, which will certainly give a push to the functioning and to the depth and liquidity of the bond market."
Elaborating on the various other measures been taken by the Government, Shri Bajaj spoke about the RFQ mechanism, the IFSC GIFT city, the increase in the FPI investment limit in corporate bond, the new FPI regulation and the investor’s charter with focus on increasing the trust and confidence of investors in the financial markets.
Speaking about the IFSC GIFT city, Shri Bajaj pointed out that "the IFSC is the unified regulator which has the powers of the RBI, SEBI, IRDAI and PFRDA for regulating the financial products, financial institutions and financial services in the IFSC."
Shri Bajaj also clarified that an International Bullion Exchange shall be soon functional at IFSC, GIFT City.
"The IFSC authority is working in collaboration with the GIFT city to establish an International Bullion Exchange. Very soon, the International Bullion Exchange that is being worked upon will be functional, followed by the Gold spot exchange," he said.
17 September 2021