India's Bond Market - Developments and Challenges Ahead

Wells, Stephen; Schou-Zibell, Lotte

doi:10.2139/ssrn.1328192

Cited by 11 publications

(8 citation statements)

References 7 publications

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“…Another huge advancement was the presentation of the Market Stabilization Scheme which has extended the instruments accessible to the Reserve Bank for dealing with the surplus liquidity in the framework. These changes can be momentarily seen as an efficient exercise for the improvement of the debt market just as reconciliation of the whole financial markets by making it profound, wide and transparent [8]. In glancing back at the succession and speed of these changes that have been set up longer than 10 years, one starts to value the complexity and difficulty that is characteristic for the advancement of a productive debt market we actually have far to go.…”

Section: Corporate Bond Marketmentioning

confidence: 99%

“…While banks were permitted to utilize futures just to fence their G-sec investments in Held for Trading (HFT) and Available for Sale (AFS) classes, PDs were permitted to interest rate derivatives (IRDs) for both hedging and trading. Nonetheless, because of the absence of liquidity of the exchange traded futures market, Securities and Exchange Board of India (SEBI) in meeting with FIMMDA improved on futures contracts on a 10-year notional bond, which is evaluated based on the Yield To Maturity' (YTM) of a bushel including three securities with development going from 9 to 11 years [9]. The exchanges are currently dispatching another product.…”

Section: Interest Rate Futures (Irfs)mentioning

confidence: 99%

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Indian Debt Market: Need for More Reforms

Banu¹

2021

jefms

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The Indian debt market while made out of securities, both Government and Corporate, is really overwhelmed by G-Sec with more than 90 per cent of Indian debt market, leaving little space for corporate securities. The focal government securities are the dominating and most fluid segments of the security market. Nonetheless, regardless of the expanded volumes, the quantity of members is restricted to around two dozen dynamic players. The focal government securities are the dominating and most fluid segments of the security market. Nonetheless, regardless of the expanded volumes, the quantity of members is restricted to around two dozen dynamic players. Since a lion's share of members is AAA – evaluated and 80 per cent of exchange is immediate, there exist settlement hazards. The market would further develop once uniform guidelines on accounting, valuation and so on are in place. Therefore, this paper highlights the need for more reform in Indian debt market.

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Section: Corporate Bond Marketmentioning

confidence: 99%

Section: Interest Rate Futures (Irfs)mentioning

confidence: 99%

Indian Debt Market: Need for More Reforms

Banu¹

2021

jefms

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“…The bond market's key aim is to provide creditors with a safe stream of income against uncertain stock market. (Schou-Zibell & Wells, 2008) identified that the Indian financial system is rapidly evolving, characterized by fast economic growth, healthier economies and even greater performance.…”

Section: The Relationship Between Bond Market and Economic Growthmentioning

confidence: 99%

Introduction of Bond Market: Would It Be a Possible Solution for Bangladesh?

et al. 2020

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This study aims at investigating the prospects of a bond market in Bangladesh. Most of the developed and developing economies have an active and successful bond market. But Bangladesh despite being one of the fastest growing economy, does not have an active bond market. Hence, this study was designed to investigate the impact of a bond market on the economic growth of Asian countries and what are the prospects and challenges in Bangladesh. To investigate the benefits of a bond market in Bangladesh, this study examined the relationship between bond market return and economic growth of 4 Asian economies which included, India, Indonesia, Hong Kong and Japan. The average annual yield of 10-year bonds was used as the independent variable and the annual GDP growth rate of these countries was used as the dependent variable in the econometric model. Data of last 20 years from 2000 to 2019 were used for all the variables. The Unit Root Test showed that 3 variables were stationary at first difference and other five variables were stationary at level. The Johansen Co-integration test identified the long run association among the variables indicating long run relationship between bond market return and economic growth. Granger Causality revealed a bi-directional relationship for India; unidirectional relationship for Indonesia (BondGDP growth) and Japan (GDP GrowthBond); and no unidirectional or bidirectional relationship among the bond market return and economic growth of Hong Kong. The various new projects, the over extension of the banking sector and perhaps the overall good condition of the economy has created the perfect situation to develop a bond market in Bangladesh. As there are conditions that provide advantages in bond market creation, there are also various challenges that the government must overcome. Some of the most important challenges to clear up are the underdeveloped tax system, the illiquid or absent secondary market, the alternative source of debt and the overall lack of investors. Considering the various developed bond markets these policy implications could seriously aid the development process.

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“…In India, the challenge of obtaining long-term funding for the infrastructure sector is greater due to the absence of a well-developed bond market. While the government bond market is illiquid, the corporate bond market is restrictive to participants and is mostly arbitrage-driven (Schou-Zibell and Wells, 2008). Problems relating to information asymmetry, low liquidity and distortions from the corporate debt segment would need to be solved to broad base the debt markets (Bose and Coondoo, 2003).…”

Section: Literature Reviewmentioning

confidence: 99%

Innovative financial intermediation and long term capital pools for infrastructure

Annamalai

Hari

2016

JFMPC

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Purpose Developing countries are increasingly looking to private sector investment for infrastructure development. Successful development of private infrastructure projects, however, depends on adequate availability of long-term debt to complement private sector equity. As domestic bond markets in many emerging countries are not very deep, availability of long-term debt funding for infrastructure has been limited. Recently, a new form of financial intermediation has emerged in India with the creation of infrastructure debt funds (IDFs) to create capital pools for long-term debt funding. This paper aims to analyse the effectiveness of IDFs for financing infrastructure projects. Design/methodology/approach This paper uses a case study approach. The case studies were written using both secondary and primary information. Secondary information was obtained from various sources such as policy papers, websites and other published sources. Primary information was obtained from interviews with the top management of three IDFs. Information obtained from multiple sources was triangulated for consistency and correctness. Findings IDFs have emerged as an effective intermediation mechanism for attracting long-term capital by offering a new investment product with appropriate risk-adjusted returns. For the fund seekers, IDFs are able to provide long-term capital at lower rates and higher flexibility. Unlike commercial banks, IDFs are able to add value to the projects apart from funding by periodic monitoring of the projects. Practical implications Creating new forms of financial intermediation can help in reducing the financing gap for infrastructure projects, especially in emerging countries. Originality/value IDFs have been analysed from a perspective of financial intermediation. The effectiveness of IDFs in bridging the funding shortfall has been evaluated from multiple perspectives.

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India's Bond Market - Developments and Challenges Ahead

Cited by 11 publications

References 7 publications

Indian Debt Market: Need for More Reforms

Indian Debt Market: Need for More Reforms

Introduction of Bond Market: Would It Be a Possible Solution for Bangladesh?

Innovative financial intermediation and long term capital pools for infrastructure

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