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High dependence on banks for infrastructure financing has been a costly failure for the Indian economy, according to KP Krishnan, Additional Secretary, Department of Economic Affairs, Ministry of Finance.
Infrastructure development, which should have been funded by the corporate bond market, was done through banks, impacting the finances of banks and infrastructure developers.
Krishnan stressed on policy and regulatory reforms in the areas of instruments, participants, market infrastructure and bankruptcy process to develop the corporate bond market. “From the first three pillars, the corporate bond market will develop high-grade instruments, whereas the fourth pillar would provide stability to lower-rated issuances,” Krishnan said at a CII event on corporate bond market.
Chandan Sinha, Executive Director, RBI, said that with considerable policy and regulatory reforms since 2005, the onus of scaling up the corporate bond market hinges upon companies now.
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