Analyze the Indias Debt

Market and
Suggestions to make it a
robust one for support to
economic growth.

CA. Bineet Sundriyal

MBF-5 (New Delhi)

Introduction to Indian
Debt Market

Introduction to Indian Debt

Market
The Debt Market is the market where fixed
income securities of various types and features
are issued and traded.
As of end 2012, the outstanding amount of
bonds in India stood at Rs 55.8 trillion ($1
trillion approx.)
Indian
Bond
Market
is
dominated
by
Government Securities. At the end of 2012
approx. 79% of Outstanding Bonds were
Government Bonds.

Comparison of Resource
Mobilization
33.30% increase in
Volume in comparison
of 2010-11
In 2011-12 about
72.60% resources
raised by G-Sec

Position of Indian Bond Market in

Asia
Indias bond market is roughly
equivalent to :
27 % of Chinas bond
market
69% of Koreas bond
Market
94% of combined bond
market of ASEAN-6

Govt. & Corp. Bond Outstanding as

% of GDP for Asian Economies

Outstanding FII Investment Limits

in Indian Fixed Income Market

Corporate Debt Market

Features of Corporate Bond Market

Corporate debt market is less than 5% of Indias
debt market and around 12% of GDP.
Indias bond market is underdeveloped even in
comparison with many emerging markets.
Indian corporate bond market is dominated by AA
or higher rated bonds.
Lack of liquidity in secondary market.

Debt Market Segments-NSE

Security-wise Distribution of
WDM Turnover

Participants-wise Distribution of
WDM Turnover

Corporate Bonds
Private Placement vs Public Placement
(in terms of volume)

in Cr.

Corporate Bonds
Private Placement vs Public Placement
(in terms of numbers)

The Problem Demand Side

Regulatory restriction on institutional investors
Restrictions on Banks for investing in Bonds.
Insurance companies are permitted to hold a maximum of
25% of their portfolio in bonds rated less than AA.
Pension fund managers are regulated to invest under 10%
of the funds collected in corporate bonds that are
investment grade
In addition, regulations require that once subscribed to
they have to be held to maturity.

Low retail participation

The Problem Supply Side

Private Placement
Absence of sub-investment grade
securities
Lack of supply of innovative debt
instruments
Long and expensive issuance process

The Way Forward

The Way Forward

The issue of Regulatory Overlapping
should be addressed.
Need of Simple Products.
Increase Liquidity in Secondary Market
Tax Incentives

The Way Forward(Cont.)

Procedural ease for Companies listed on
any exchange in India.
Rationalization of Stamp Duty.
Appointment of Market Makers in Corp
Bond Market.
Trading Platforms.

Thank You

Why Private Placement ?

Minimum Disclosures
Low cost
Tailor made Structures
Speedy Fund Raising

Structure of Indian Debt Market

Trend of Primary Issuance of Corporate

Bonds (Rs Bn)