“With bank finance drying up for long-term infrastructure projects in view of asset liability problems faced by the banking system, the need for further development of a deep and vibrant corporate bond market can hardly be over-emphasised,” it said. In current fiscal, till November, corporate bonds worth Rs 147,400 crore was privately placed on the Bombay Stock Exchange and the National Stock Exchange.
Apart from creating a comprehensive database for corporate bonds, it has suggested including lower and uniform stamp duties across states for these bonds.
Non-banking finance companies are main issuers of corporate bonds. “The corporate bond market... is only about 14 per cent of the total bond market,” it added.
Pre-dominance of bank loans, crowding out by government bonds, limited participation of FIIs and lack of investor confidence are among reasons for the languishing bond market.
“The corporate bond market has languished both in terms of market participation and structure,” it noted.