“Urgent need for deepening of Bond Market for Infrastructure Development,” SEBI Chairman, Ajay Tyagi

New Delhi: The Securities and Exchange Board of India Chairman believes that there is an urgent need for the development of bond.

“The need for bond market development has been often stated by various people from various forums. There is an increased urgency for this now considering the infrastructure development ambitions in the country,” said SEBI Chairman, Shri Ajay Tyagi while addressing the Inaugural Session of the 12th CII Financial Markets Summit.

The SEBI Chairman further mentioned that “trading in secondary market lacks depth and is largely dominated by mutual funds. We need more public issuances, issuances of relatively low rated bonds and increased depth in secondary market with many more players.”

He also elaborated on the initiatives taken by SEBI as well as the reforms that SEBI has in pipeline to achieve such a bond market.

Shri Tyagi added that there was also the need for development of credible credit default swap market.

“Another important need is for development of credible credit default swap market to facilitate transfer and management of credit risk in an effective manner,” he said.

Focusing on the theme for the 12th CII Financial Markets Summit, the Chairman mentioned that “building India for a new world needs further encouragement and growth of capital markets to meet the funding requirements of growing economy in a transparent manner.”

Shri Tyagi also mentioned that India still had to go a long way in order to deepen the domestic individual investor’s participation in capital market.

SEBI Chairman also acknowledged the need for having a robust margining system.

“Having a robust margining system is a must for ensuring a fair, transparent and reliable trading,” he said.

Speaking on the topic of sustainability reporting and ESG investments, the chief of the regulatory authority said that encouraging sustainable investments was no longer a fad and had become the need of the hour.

Also addressing the Inaugural session was Mr T V Narendran, President, CII and CEO & MD, Tata Steel Ltd., who stated that “there was a seminal change in the way financial sector has evolved during the pandemic and this change agent has been technology. Also, we see a shift from Bank-led to market-led model of economic progression.”

Mr Narendran also highlighted a few issues for Shri Tyagi’s kind consideration.

He mentioned, “there is need to have investor friendly KYC norms that is very critical for the entry of new investors into the market.” He further added that “there was a need for standardization of minimum KYC requirements by all the financial sector regulators and mandatory uploading of existing and updated records in c-KYC records registry by all regulated entities.”

CII President also iterated that the requirement for the Chairman and MD/CEO not to be related should not be mandatory especially considering that requisite checks and balances are already present in current laws to counter any potential ill-effects of such a situation. “Such a requirement, which at times can even be counter-productive, is not mandatory in even advanced economies such as UK, US, France etc. It is important that Indian entrepreneurs are not placed at a disadvantage by imposing such requirements. Feedback from our membership reflects their desire that the decision should be best left to the discretion of the Board and to the will of the Shareholders, he said.

Earlier at the session Mr Chandrajit Banerjee, Director General, CII delivered the welcome address. He highlighted that it was necessary to get the country back on its growth trajectory and to re-shape businesses through adequate financing options.

The Director General, CII, added that “An important point that I would like to mention is that the Indian Government and Regulators have laid immense Trust in the Indian Busines and Industry through-out the tough period of COVID, whether it is through stable interest and tax rate regime, the position taken on retrospective tax, an enabling ECLGS Scheme with backstop to help the affected sectors to remain above water.”