debt_market

May 19th, 2015
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Abilene Christian University
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Do you know the impact of the debt market on the economy? Opportunity for investors to diversify their investment portfolio. Higher liquidity and control over credit. Better corporate governance. Improved transparency because of stringent disclosure norms and auditing requirements. Less risk compared to the equity markets, encouraging low-risk investments. This leads to inflow of funds in the economy. Increased funds for implementation of government development plans. The government can raise funds at lower costs by issuing government securities. Implementation of a monetary policy.

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Debt Market in India: Key IssuesAnd Policy RecommendationsWhat is a debt market? A part of the capital market. A debt market is also known as a fixed income market as debtinstruments pay fixed returns.Do you know the impact of the debt market on the economy?Opportunity for investors to diversify their investment portfolio.Higher liquidity and control over credit.Better corporate governance.Improved transparency because of stringent disclosure norms andauditing requirements. Less risk compared to the equity markets, encouraging low-riskinvestments. This leads to inflow of funds in the economy. Increased funds for implementation of government development plans.The government can raise funds at lower costs by issuing governmentsecurities. Implementation of a monetary policy.The major reforms that took place in the1990s Introduction of the auction system for sale of dated government securitiesin June 1992. The RBI moved to computerize the SGL and implement a form of adelivery versus payment (DVP) system. Innovative products in form of Zero Coupon Bonds and Capital IndexedBonds (Ex. Inflation Linked) were issued. The RBI setup trade for trade regime. All forms of netting wereprohibited. Wholesale Debt Market (WDM) segment was set up at NSE. Interest Income in G-Secs was exempted from the purview of TD. FIIs with 100% Debt Schemes were allowed to invest in GOI Securities and

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