International Research Journal of Commerce , Arts and Science

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BOND MARKET IN INDIA: DETERMINANTS, DEVELOPMENT AND THE PRESENT STATE OF AFFAIRS

    3 Author(s):  DEEPSHIKHA YADAV , NAVIN KUMAR , ANURADHAGOEL

Vol -  6, Issue- 1 ,         Page(s) : 110 - 127  (2015 ) DOI : https://doi.org/10.32804/CASIRJ

Abstract

Abstract As per twelfth five year plan India needs around USD $ 1 trillion of investment in infrastructure and it is estimated that close to 50 percent will be funded by debt from private sector. However, due to underdeveloped long term debt market this goal seems to be almost impossible to achieve. Government bond market is vibrant with large number of issues and satisfactory level of liquidity. Corporate bond market is in infancy and Municipal bond market is almost non-existent. The determinants have been categorised into two groups: broad factors and specific factors and India’s progress on these factors have been described. The benefits of a healthy bond markets goes long way in de-risking the burdened banking sector, providing the “spare tire” in case of breakdown of a segment of financial system. The factors like poor contract enforcement mechanism, procedural bottlenecks in the issuance process, low investment ceilings placed on financial institutions are some of the specific reasons behind under development of corporate bond markets. Concerted efforts of SEBI, government, RBI and other key stakeholders would be required to turn around the fledgling corporate bond market and municipal bond market.

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