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Finance Minister P. Chidambaram has suggested to the Securities and Exchange Board of India to convene a meeting of top corporate houses to discuss the steps needed to further develop and deepen the corporate bond market.
The issues relating to the development of the corporate bond market came in for special discussion at the meeting of the Financial Stability and Development Council (FSDC) here today. Chidambaram chaired the meeting, which was attended by D. Subbarao, RBI Governor; U. K. Sinha, SEBI Chairman; Yogesh Agarwal, PFRDA Chairman, and R.K. Nair, IRDA Member.
Steps discussed
This was the first FSDC meeting chaired by Chidambaram after assuming charge as Finance Minister on August 1.
“We discussed the steps required to develop the corporate bond market. I have suggested to SEBI to call a meeting of top corporates to discuss what needs to be done more,” Chidambaram said.
Chidambaram has promised to participate in the meeting to be convened by the capital market regulator.
At today’s FSDC meeting, the steps taken so far towards developing the corporate bond market were reviewed, said Arvind Mayaram, Economic Affairs Secretary.
The council also discussed steps to be taken to rationalise the framework for regulation of corporate debt so as to remove regulatory constraints for issuers and protect investors, encourage participation of long-term investors, reduce cost of public issuance, and increase liquidity by improving the market structure.
The need for a roadmap for a structural shift towards a diverse financial system with an adequate emphasis on corporate bond instruments was discussed.
Pension funds
Mayaram confirmed that the council discussed the proposed relaxation of investment guidelines for pension funds and insurance companies.
The council was also apprised of the progress made by the sub-committee on three broad fronts, i.e. assessing and addressing risks to financial stability, inter-regulatory co-ordination issues and issues relating to financial inclusion and financial literacy.
Action taken by the sub-committee for putting in place an effective mechanism for supervision of the financial conglomerates, a resolution regime for financial institutions and regulation of investment advisors were noted by the council.
The council will meet again in early April to review steps taken on the various suggestions.
> Shishir.sinha@thehindu.co.in
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