Jaitley pitches for a deeper bond market
MUMBAI: Union finance minister Arun Jaitley on Tuesday said India needs a “deeper” bond market, and said it is a priority area for the government, which is keen to strengthen the corporate bond market as an alternative to borrowing from banks.
“Banks’ resources are constrained by the slowdown in certain sectors, which has impacted the health of the banks themselves. So, one of the area India looks forward to is to deepen the bond market,” Jaitley said in his valedictory session at a CIIBRICS event on corporate bonds.
Corporate bonds are issued by companies to borrow money from people in return for a fixed interest. Deepening of the market would imply allowing entry to multiple players in issuing and repurchasing the bonds, which is till now limited to a few entities.
The Reserve Bank of India recently said it is looking at allowing brokers to repurchase bonds and permit foreign investors to directly trade them. “The government has accepted most of the recommendations (of the HR Khan committee),” said Jaitley. “I feel these should be implemented in the next 6-8 months.”
Earlier, Sebi chairman UK Sinha called for easier taxation for corporate bonds. “Taxation on income from bond market is rather high and that will be an issue,” Sinha said, who added that the regulator will formulate norms for algorithmic trading in consultation with the RBI and the government.