SEBI move fails to cheer bond market
The corporate bond market has not shown any considerable growth in the past 11 months despite SEBI's fast-track approach, reports Vyas Mohan.business Updated: Dec 25, 2007 20:36 IST
The country's corporate bond market has not shown any considerable growth in the past 11 months despite the market regulator Securities and Exchange Board of India’s (SEBI) fast-track approach towards the establishment of a vibrant corporate bond market in the country.
A senior SEBI official said that though the regulator is scurrying ahead to put in place simplified disclosure norms on primary debt market issuances — the last task assigned to it in the high level expert committee report — the segment is unlikely to witness any significant improvement in activity with several other proposals remaining unimplemented.
“Out of the 66 recommendations of the committee's report, 45 have been implemented. We will soon put out the simplified disclosure norms on bond issuances. That will be the last part of our duty. However, many other things need to be done to vitalise the corporate bond market,” the official said.
Important measures like implementation of uniform stamp duty, amendment of the companies act to allow corporates to issue shelf prospectus, among other issues are essential for the corporate debt market to pick up, he added.
As per the report, since stamp duty is a state subject, governments must bring in some consensus to make it uniform on corporate bonds. Currently, only public financial institutions, public sector banks or scheduled banks with the main objective of financing, can file a shelf prospectus. The entity filing a shelf prospectus would not be required to file a fresh prospectus at every stage of the offer of security, within its period of validity.
“Along with these, the risk weightages for corporate bonds should also be allowed on par with government securities,” a source added.
As per data with the regulator, the total value of corporate bonds traded fell from Rs 8,105.28 crore in January 2007 to Rs 5,893.80 crore in November. Registering a high of Rs 14,219 crore in October, trades averaged only Rs 7,228 crore over the past 11 months.