RBI executive director Chandan Sinha said on Monday that nearly 10-15 per cent of funding requirements of large corporates should be met through the corporate bonds market.
Speaking at a summit on the corporate bond market organised by the Confederation of Indian Industries (CII), Sinha said, “With considerable policy and regulatory reforms since 2005, the onus to scale up development of the corporate bond market hinges on corporates now. Ten per cent to 15 per cent of funding requirements of large corporates should be met through this route.”
Sinha said that this would help diversify risk away from the banking system and there is a need to have implicit faith of retail investors in the corporate debt market.
Economic affairs additional secretary K P Krishnan, speaking at an interactive session, said that despite the stated policy of corporate bond market development for the last one decade or more, a high dependence on banks for infrastructure financing has been a costly failure for the economy.
“There is a sense of urgency in developing a corporate debt market due to the huge funding requirement in future,” he said.