India should look at listing of closed-ended debt mutual funds in bourses as part of efforts to crowd in household savings into markets, Sanjay Nayar, CEO of KKR India Financial Services, has said.
Regulators should sit together and create more permanent vehicles that can be listed in stock exchanges, Nayar said at a session on ‘Future of Financing’ at the CII Annual Session 2019 in the capital.
Nayar felt that time was ripe for India to look at concepts such as Business Development Conduits (BDC) — a popular vehicle in the US that are nothing but listed mutual funds. These BDC get monies from household savings (daily sweeps from savings accounts) and deploy them as business loans. The BDCs give a yield of about 8 per cent and listing of them can crowd in retail household savings, Nayar said.
“In India we don’t have listed mutual funds. We should look at it, especially the closed-ended debt mutual funds,” he said.
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Nayar, who is also Chairman, CII National Committee on Private Equity and Venture Capital, highlighted that household savings in India have not gone into markets in a big way. At the same time he welcomed the government efforts to introduce new market mechanisms such as AIFs, InviTs, REITs in the Indian market.
“We must look to leverage on government equity contribution and go to the market to raise monies through infra bonds. We have to rope in household savings and retail savings in infra bond market,” Nayar said.
He also said the government should look to develop more focussed DFIs such as REC and PFC instead of looking to set up DFIs that will be broad-based.