However, ADB in a report said India continues to attract capital even in the face of global market turbulence.
India as Asia’s third-biggest economy averaged growth of about 8.5 per cent in last four years and its stock market attained world-class standards.

But the development of a “true credit culture” remains hindered as corporate borrowers continue to depend on bank finance and stock markets for funding, ADB said.

Modest growth

Since 1996, India’s stock market capitalisation as a percentage of gross domestic product (GDP) has risen to 108 percent from 32.1 percent, while banking sector’s ratio to GDP jumped to 78.2 percent from 46.3 percent.

In contrast, bond markets grew to a modest 43.4 percent of GDP from 21.3 percent. India’s government bond market, at 38.3 percent of GDP, stands ahead of most emerging East Asian markets, with the need to finance a large fiscal deficit stimulating issuance activity.

Corporate bonds, however, accounted for only 3.2 percent of GDP.  In absolute terms, the total outstanding volume of government bonds in India stood at USD 364 billion, behind only China and South Korea.

But with the dominance of the private placement market in India, its corporate bond market development lagged most emerging East Asian countries.