In a bid to deepen the corporate bond market, the government is working on setting up a “support facility” as announced in the budget, a senior government official said on Friday.
Speaking at an event hosted by CII, Additional Secretary of the Ministry of Finance, Anand Mohan Bajaj, said the government, in consultation with the RBI, had raised the cap on foreign investor participation in bonds issued by foreign investors. company from 9 to 15%.
In the corporate bond market, he said, a lot has been done over the years and a lot remains to be done.
“We are working on a very comprehensive facility. It will certainly inspire confidence among participants in the corporate bond market,” he said.
Based on a proposal from Sebi, an announcement in the Union budget for 2021-2022 was made regarding the creation of a ‘support facility’ that would buy quality debt securities in times of crisis such as in normal times, and would contribute to the development of the bond market.
Bajaj added that the government is also working on developing an investor charter.
The charter will focus on the rights and responsibilities of investors as well as the mechanism for resolving investor grievances.
The investor charter will not only help bring more transparency to the investment process, but will also encourage market investors to invest with better knowledge.
In order to protect investors, the Minister of Finance Nirmala Sitharaman in the Union budget 2021-2022 had proposed to introduce an investor charter as the right of all financial investors on all financial products.
Speaking at the event, Senior Economic Advisor Sanjeev Sanyal said the government and the RBI are working on including Indian sovereign bonds in global bond indices and an announcement in space is expected during of the year.
“We opened up a section of our government debt market to foreign players last year. Some have invested in it, but less than 50% of what has been opened.
“I think there’s a case where we get into the global bond indices, and a lot, a lot of micro-steps, whether it’s Euroclear, tax, etc., are going on.” , Sanyal said.
This move would attract larger foreign flows, as many foreign funds are mandated to track global indices. It will also help attract large passive investments from abroad, which would allow more domestic capital to be available for the industry, as crowding out would be reduced.
Globally, some large institutional investors follow these indices, such as the Bloomberg Barclays Emerging Market Bond Index, for position decisions on sovereign papers.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)