India's corporate bond market remains underdeveloped despite strong economic growth and significant financial system reforms, the Asian Development Bank said in New Delhi.
"Several changes have helped strengthen the corporate bond market...but it remains undeveloped relative to the government market," ADB Head, Office of Regional Economic Integration Jong-Wha Lee said.
The observations are a part of the recently released edition of Asia Bond Monitor, a semiannual publication, which includes a theme chapter on Indian bond market.
Lee said that securitization has a long history in India but the development has been slow and limted to a few asset types.
The report found that corporate borrowers continue to depend on bank loans, equity markets and private placement to meet their requirement of funds.
To address the lack of liquidity in the bond market, the report suggested easing investment mandate on contractual savings institutions, development of derivative and swap markets and facilitate foreign investment by relaxing exchange controls.
The report suggested reforming the stamp duty structure and revamping disclosure requirements for corporate public offers.
"Streamlining reulatory and supervisory structure could contribute to substantial efficiency spurring innovation, economies of scale, liquidity and competition," Lee said.