ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Debt MarketSubscribe to Debt Market

Reforming Indian Debt Markets

While equity markets in India have got radically transformed since the 1991-92 securities scam, the government securities markets have not changed very much except that the Reserve Bank of India has significantly improved the settlement process. Recognising the need for introducing transparency and to reform the secondary markets in government securities and money market instruments, the RBI will soon operationalise the Negotiated Dealing System (NDS). Simultaneously, the Clearing Corporation of India (CCIL), promoted by major banks, financial institutions and primary dealers, will be a key market infrastructure to significantly improve market efficiency and integrity. Together with the NDS, the CCIL will introduce major reforms in the way the government securities and money markets function today.

Industrial Finance and Capital Market

Given the current state of the financial institutions and banks, it will take many years before they are integrated into the capital market framework thus bridging the artificial gulf that exists today between the two. The basic function of financial institutions and banks and the financial/capital markets is to facilitate the transfer of funds from the surplus to the deficit pockets. The main thrust of policy now should be to create seamless linkages between DFIs/banks and capital markets to facilitate this process of transfer from the ultimate savers to the ultimate users at minimum cost. Such a policy should also ensure a neutral stance towards banks and the capital markets thus making for an environment where there is efficient resource allocation as well as a certain discipline among users of funds.
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