Bond de­mand to out­strip sup­ply in 5 yrs: RBI dy guv

The Times of India (New Delhi edition) - - Times Business - TIMES NEWS NET­WORK

Mum­bai: An RBI deputy gov­er­nor has said that de­mand for bonds in In­dia will sig­nif­i­cantly out­strip the sup­ply in five years. To de­velop the bond mar­ket, the RBI is look­ing at banks sell­ing more of their loans and new types of in­vestors be­ing al­lowed to par­tic­i­pate.

This state­ment by the deputy gov­er­nor seems to in­di­cate a ta­per­ing of the gov­ern­ment bor­row­ing, con­sid­er­ing that the bulk of the bond mar­ket in In­dia com­prises of gov­ern­ment bonds. In 201920 alone, the cen­tral gov­ern­ment is ex­pected to is­sue Rs 7.1lakh-crore bonds un­der its bor­row­ing pro­gramme.

Speak­ing on what needs to be done to de­velop a bond mar­ket, RBI deputy gov­er­nor B P Ka­nungo said the most im­por­tant pre­req­ui­site of a liq­uid and ro­bust mar­ket is wide par­tic­i­pa­tion by agents with large vol­umes of mer­chan­dise. “In this re­spect, banks con­sti­tute the sin­gle largest set of en­ti­ties fol­lowed by in­sur­ance com­pa­nies, pen­sion funds, and now al­ter­na­tive in­vest­ment funds. It has been gen­er­ally ob­served that en­ti­ties with a large hold­ing of gov­ern­ment se­cu­ri­ties are not very ac­tive ei­ther in mar­kets or in in­no­va­tion,” he said. He was speak­ing at an event or­gan­ised by In­dian bond deal­ers in Moscow last week.

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