SEBI aims to refurbish the corporate bond market

In a move which can strengthen the corporate bond market, SEBI has decided to allow well-regulated Foreign Portfolio Investors (FPIs) to trade directly in these securities without any broker. Currently, FPIs can trade in Indian markets only through brokers who are registered with the stock exchanges as their members.

The revised norms would be applicable for Category-I FPIs that include sovereign wealth funds and central banks as well as Category-II FPIs, which include mutual funds and banks. However, hedge funds, individuals and other high risk foreign investors will not get this facility.

On the issue, SEBI chairman, U K Sinha said, access to FPI in bond market has been liberalised. Bank loans are not solution for long term financing and there is a serious flaw in transmission of monetary policy. Lot more needs to be done to develop the corporate bond market.

On the other hand, Finance Minister, Arun Jaitley on September 28 will address a session on ways to develop the bond market and possibilities of sharing the best practices followed by BRICS countries.