The document analyzes India's debt market and provides suggestions to make it more robust to support economic growth. It summarizes that India's debt market is dominated by government bonds, and the corporate debt market accounts for less than 5% of the total market. It identifies several problems on both the demand side like regulatory restrictions on institutional investors and low retail participation, and on the supply side like reliance on private placements and lack of innovative instruments. The document concludes by recommending ways to address regulatory overlapping, increase product simplicity and liquidity, provide tax incentives, ease issuance processes, and develop the secondary market to strengthen India's corporate debt market.

1. Analyze the India’s Debt Market
and
Suggestions to make it a robust one
for support to economic growth.
CA. Bineet Sundriyal
MBF-5 (New Delhi)

2. Introduction to Indian Debt
Market

3. Introduction to Indian Debt Market
• The Debt Market is the market where fixed income
securities of various types and features are issued and
traded.
• As of end 2012, the outstanding amount of bonds in India
stood at Rs 55.8 trillion ($1 trillion approx.)
• Indian Bond Market is dominated by Government
Securities. At the end of 2012 approx. 79% of Outstanding
Bonds were Government Bonds.

4. Comparison of Resource Mobilization
33.30% increase in Volume
in comparison of 2010-11
In 2011-12 about 72.60%
resources raised by G-Sec

5. Position of Indian Bond Market in Asia
India’s bond market is roughly equivalent to :
 27 % of China’s bond market
 69% of Korea’s bond Market
 94% of combined bond market of
ASEAN-6

6. Govt. & Corp. Bond Outstanding as % of GDP
for Asian Economies

7. Outstanding FII Investment Limits in Indian
Fixed Income Market

8. Corporate Debt Market

9. Features of Corporate Bond Market
• Corporate debt market is less than 5% of India’s debt market
and around 12% of GDP.
• India’s bond market is underdeveloped even in comparison
with many emerging markets.
• Indian corporate bond market is dominated by AA or higher
rated bonds.
• Lack of liquidity in secondary market.

10. Debt Market Segments-NSE

11. Security-wise Distribution of WDM Turnover

12. Participants-wise Distribution of WDM Turnover

13. Corporate Bonds
Private Placement vs Public Placement
(in terms of volume)
₹ in Cr.

14. Corporate Bonds
Private Placement vs Public Placement
(in terms of numbers)

15. The Problem – Demand Side
 Regulatory restriction on institutional investors
• Restrictions on Banks for investing in Bonds.
• Insurance companies are permitted to hold a maximum of 25% of
their portfolio in bonds rated less than AA.
• Pension fund managers are regulated to invest under 10% of the
funds collected in corporate bonds that are investment grade
• In addition, regulations require that once subscribed to they have
to be held to maturity.
Low retail participation

16. The Problem – Supply Side
 Private Placement
 Absence of sub-investment grade securities
 Lack of supply of innovative debt instruments
 Long and expensive issuance process

17. The Way Forward

18. The Way Forward
The issue of Regulatory Overlapping should be
addressed.
Need of Simple Products.
Increase Liquidity in Secondary Market
Tax Incentives

19. The Way Forward(Cont.)
 Procedural ease for Companies listed on any
exchange in India.
 Rationalization of Stamp Duty.
 Appointment of Market Makers in Corp Bond
Market.
 Trading Platforms.

20. Thank You

21. Why Private Placement ?
 Minimum Disclosures
 Low cost
 Tailor made Structures
 Speedy Fund Raising

22. Structure of Indian Debt Market

23. Trend of Primary Issuance of Corporate Bonds (Rs Bn)