"While the infrastructure in India does not entirely depend on the growth of the bond market, it provides an excellent opportunity to drive the bond market's development," M Damodaran, chairman, Securities and Exchange Board of India, said on Wednesday.
He was delivering the inaugural keynote address at the Capital Markets Summit on 'Infrastructure Financing through Capital Markets', organised by the Confederation of Indian Industry Western Region.
Pointing out there is complete awareness of what needs to be done, who needs to do it and the urgency to get it done, Damodaran said the only thing missing is its execution.
Commenting on the possible timeframe of four to six months that had been indicated, he said the process may commence much sooner.
"We should not allow numbers to frighten us, we have a road map. The crucial thing is to ensure that there is no segmentation in the market as that would stand in the way of growth. What needs to be done is to persuade people that they should not postpone decisions. Instead of relying on government guarantees to lure investors, the product itself has to be attractive," he stressed.
Emphasising that the government was not standing in the way of investment in the bond markets, he said that this wrong perception was creating a barrier. "We must see ourselves as part of the solution rather than complain."
Delivering the special address, K P Krishnan, joint secretary (capital markets), ministry of finance, pointed out that currently the public sector continues to dominate debt markets.
Several legal and policy issues need to be revisited and stamp duty issues need to be addressed, he said.
According to Krishnan, while the debt market will continue to be institution driven, there is also the question of creating a host of potential investors. The lack of liquidity would not hamper growth very much, he felt, because the markets would find solutions if all other constraints were addressed.
In his theme address, Nimesh Kampani, chairman Capital Markets Summit, chairman, CII National Committee on Capital Markets, and chairman, J M Financial Group, highlighted the CBDT decision on accumulated interest being taxable as an impediment to the growth of the corporate bond market.
To make infrastructure more viable and raise resources for its funding, he recommended creating domestic markets, deepening the market, providing liquidity to attract investors and creating a wider base of investors.
Jignesh Shah, managing director & CEO, Multi Commodity Exchange of India Ltd., pointed out that a lot needs to be done to create an organised debt market. "There is virtually no mechanism in place for corporates to raise debt-based funds. The market requires a concentrated approach with tax incentives and risk profiling," he emphasised.
Rajnikant Patel, executive director & CEO, Bombay Stock Exchange Ltd., said the development of corporate debt and bond markets will help Indian financial markets. "There is a need to move forward and look at the offerings that today's world and financial markets expect. We have a lot of catching up to do where markets in the US are concerned for instance," he stressed.
Farhad Forbes, chairman, CII Western Region and Director, Forbes Marshall Pvt. Ltd., said one area that has the potential to derail the Indian economy is infrastructure. Compared to China, there is a glaring gap in investments in this sector and funding will need to substantially come from the private sector, he said.
Chandrajit Banerjee, senior director, CII, pointed out that India needs quality infrastructure to sustain the current levels of growth, and the necessary condition for infrastructure development is availability of low cost long-term capital.
Pointing out that the corporate bond market in India was still in the Stone Age, R H Patil, chairman, The Clearing Corporation of India Ltd, stressed on the need to act on several fronts.
Chairing a plenary session, Patil underplayed the importance of China's financial sector and said that US, Korea and Japan were the role models that India needed to emulate.
Stating that if the Indian economy drivers shifted from the services sector to manufacturing an infrastructure, Patil stressed that the banking industry would not be able to meet those requirements.
Commenting on the way ahead, he said that big changes were on the anvil but the corporate bond market needs a big push from the government and Sebi.
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