SEBI sets up new division to deepen the bond market in India
The new division aims to develop a market for corporate bonds and increase retail participation
Tarun Sharma
Moneycontrol News
Even as equity markets are in the throes of an unprecedented bull run, the Securities and Exchange Board of India has begun taking steps to deepen the bond market. The regulator has set up a separate department for introducing new products in these segments last week, mindful of the potential they hold, sources told Moneycontrol.
The new division aims to develop a market for corporate bonds and increase retail participation.
“A lot of work has been done on equities as a product; the regulator now wants to focus on the corporate bond market, which is currently very small,” the source said.
“Activity in corporate bonds has picked up over the last year; a lot of work still needs to be done in this category,” the source said.
SEBI chairman Ajay Tyagi was part of the HR Khan committee which had prepared a report for developing the corporate bond market.
“So, new chairman knows the potential and the importance of corporate bonds for the growth of the economy,” the source said.
In the SEBI annual report’s message, Tyagi had said, “Developing a liquid and vibrant corporate bond market further is an important agenda for enhancing the role of the Indian securities market in channelising long term finance. Sebi will work with all stakeholders for this.”.
The new division will also work on formulating norms for Alternative Investment Funds (AIFs).
The regulator had already formed regulations for start-ups to list on stock exchanges, but the concept has been a non-starter. The new department may now look into tweaking the regulations to encourage start-ups to go public.
Another key product that the regulator might put under the purview of the newly started department is municipal bonds. Last year, Prime Minister Narendra Modi had announced that the government will target listing of 10 municipal bonds in a year. As of now, only the Pune Municipal Corporation has come out with its bonds.
This department may also work on norms for crowdfunding, which has been under consideration for the last two years. Regulations for listing of asset restructuring companies and new investment products of commodities could also come under its purview. The regulator will soon issue a circular allocating work for the new division.
