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Lower govt borrowings to help bond market: SEBI official

Lowering of government borrowings as announced in the budget from Rs 5.80 lakh crore to Rs 3.48 lakh crore during the current fiscal would augur well for the corporate bond market, a SEBI official said.

“The government has expressed its decision to adopt the path of fiscal rectitude. Thus the previous government borrowings figure of Rs 5.80 lakh crore has been pared to Rs 3.48 lakh crore. This leaves of a gap of more than Rs two lakh crore,” SEBI wholetime member G Mahalingam said at an Assocham seminar.

He said this would augur well for the corporate bond market and it could play an important role in plugging the gap. The SEBI member said traditionally in India, government securities had been treated as the only high quality liquid asset (HQLA).

“Over a period of time corporate bonds will be treated as HQLA and government is slowly yielding place in favour of bonds”, he said.

Slowly and steadily the bond market was growing and the amount raised through such instruments had surpassed bank credit, he said. However, unless the secondary market for bonds was vibrant people would not recognise the importance of these instruments.

“It is the duty for everyone, including the regulators, to see that the secondary market becomes vibrant which will also bring in depth. “We have developed a lot of eco-system, but that eco-system needs to go the full distance,” Mahalingam said.

The government and the regulators had put in place several measures to increase the attractiveness of the bonds, he added.

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