The Indian corporate bond market which sees annual issuances of close to Rs. 70,000 cr is dominated by private placements. Reasons for the tardy pace of the growth of the bond market:
- The biggest subscribers such as institutional players, especially banks, prefer to lend to corporates rather than subscribing to their debt issuances.
- Earlier, inter-regulatory issues centering around turf issues between RBI and the capital markets watchdog SEBI dogged the market.
- It is a market which has a small investor base – mainly institutional players.
- Liquidity is a major bug bear. Daily volumes in the corporate bond market on the stock exchanges is hardly about Rs. 100 cr.
- There is the issue of trading platform or delivery channel to contend with. Though NSE is equipped, SEBI opted for BSE.
- Lack of a uniform stamp duty – something which may be close to being sorted out.
- Other issues are: rigid listing norms, availability of latest data and other operational issues.
- Raising funds abroad is seen as a viable option.
- Bank lending at attractive rates for corporates.