INDIAN DEBT MARKET

Presented BY:
SANDEEP KR. YADAV
 FLOW OF PRESENTATION
Overview of Indian debt market.
Market segments.
Participants of debt market.
Factors affecting the debt market.
Debt Market Instruments.
Risks associated with debt securities.
Working of Indian debt market
Future expectations from Indian debt market.
Regulatory & procedural aspects.
 Overview of Debt Market
The debt market is a market where fixed income
securities issued by the Central and state
governments, municipal corporations, government
bodies, and commercial entities like financial
institutions, banks, public sector units, and public
limited companies. Therefore, it is also called fixed
income market.
Indian debt market is largest in Asia.
Money market is part of debt market, where short
term debt securities are brought & sold.
 Primary Market Segments
Governments Securities ( G- SEC) e.g. T bills, floating
rate bonds, zero coupon bonds etc.

Public Sector Undertaking (PSU Bonds) e.g.

debentures, CP, CD etc.

Corporate Bonds/private sector bonds e.g. CP, CD,

zero coupon bonds, debentures etc.
 Secondary Market Segments
Wholesale Debt Market (WDM)
Large investors and a high average trade value
characterize.
Zero Coupon Bonds, CP, CD, Corporate Debentures,
State Government loans, SLR and Non-SLR Bonds etc.
are major trading instruments.
Retail Debt Market (RDM)
It is known for small investors and low average trade
value .
Govt. securities are the instruments traded.
 Participants of debt market
ISSUERS INVESTORS
Central Governments Banks
Reserve Bank of India Mutual funds
Primary dealers Foreign Institutional
State Governments Investors
Public sector units Provident funds
Corporate treasuries Charitable Institutions
Corporates. Individuals.
 Debt Market Instruments
Treasury Bills (T-Bills)
Repurchase Agreements
Commercial Papers
Certificate of Deposit
Bonds
CBLO
Call money
 Benefits of debt market
• Diversification of financing and investment options.
• An instrument for the banking system to manage
liquidity and risk in an effective manner.
• Allows central banks to control liquidity.
• Financing the developmental activities of govt.
• Helps in corporate and government transparency.
• A tool for implementing monetary policies.
• Reduction in borrowing cost of govt. and private
sector.
 Factors affecting the debt market
Market Interest Rates
Inflation
Credit Rating
Exchange rates
Corporate cash flow
 Risks Associated with Debt Securities
Default Risk/ Credit risk
Interest Rate Risk
Call and prepayment risk
Downgrade risk
Exchange rate risk
Inflation risk
Event risk
WORKING OF DEBT MARKET
FUTURE EXPECTATIONS FROM INDIAN DEBT MARKET
Infrastructure financing through debt
Investor base needs to be broadened
Widening the issuer base trading, development of
trade reporting system
Innovative instruments for debt market
No discrimination among g-sec and corporate debt
 Regulatory & Procedural aspects
Reserve Bank of India
Concern with issuance and management of govt.
securities.

Security Exchange of India

Concern with issuance & management of corporate
debt securities regulation of secondary market and

FIMMDA –A Self Regulatory Organization