A Broader Picture into the BRICS Bond Market
BENGALURU: The chairman of securities and exchange board of India (SEBI) U K Sinha has put forth the idea of bond market to the BRICS group of nations to enhance the bloc’s development bank, recently christened as the New Development Bank. According to the Times of India Business, Sinha was addressing top banking and finance officials among BRICS nations, organized by the finance and industry trade body CII.
Sinha further discussed the challenges the BRICS officials face in developing the bond market in respective countries and also allowed them to share their remedies to overcome these hurdles in other countries. In addition, Sinha has also mentioned about the additional developments witnessed in the corporate market in the last few years and the scope for deepening this segment of the financial market. He even proclaimed that the major operational issue in this market is the non-uniform stamp duty rates across states.
The hurdles in developing the bond market occur with the differentiated regulatory moves when the companies tap bank for loans and when they access corporate bond market. Citing example of the any company, the sebi chief says that if a company opts for cash credit or overdraft facility from a bank, it becomes a private deal. In comparison, if the company draws funds from the bond market and the same bank buys those banks, it’s the responsibility of the company to disclose information to the public.
The recent developments including a dedicated platform for trading in corporate debt, repository of bonds, regulation for the development of municipal bonds, and a bankruptcy code that protects the bond investors, contributes to eliminate the major hurdles in deepening bond market.
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