5 Development of Securities Markets: The Indian Experience
Figure 5.2. Turnover in Cash and Derivatives Segment of the NSE Stock Exchange
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1.3 INDIAN EXPERINCE
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- Corporate Securities: Debt Segment
- Figure 5.3. Trends in Market Capitalization
Figure 5.2. Turnover in Cash and Derivatives Segment of the NSE Stock Exchange
(In rupees crore) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Jun-2000 Sep-00Dec-00M ar -01 Jun-01Sep-01Dec-01M ar -02 Jun-02Sep-02Dec-02M ar -03 Jun-03Sep-03Dec-03M ar -04 Jun-04Sep-04Dec-04M ar -05 Jun-05 Derivatives Cash ©International Monetary Fund. Not for Redistribution 122 D EVELOPMENT OF S ECURITIES M ARKETS : T HE I NDIAN E XPERIENCE investment in equities in 2004–05 was Rs. 44,123 crore, which was one of the highest investments in equities in a single year by FIIs. Corporate Securities: Debt Segment From the perspective of developing countries, a liquid corporate bond market can play a critical role in supporting economic development. It supplements the banking system to meet the requirements of the corpo- rate sector for long-term capital investment and asset creation. It provides a stable source of financing when the equity market is volatile. Further, with the decline in the role of DFIs, there is an increasing realization of the need for a well-developed corporate debt market as an alternative source of finance. A number of policy initiatives were taken during the 1990s to activate the corporate debt market in India. The interest rate ceiling on corporate debentures was abolished in 1991, paving the way for market-based pric- ing of corporate debt issues. In order to improve the quality of debt issues, rating was made mandatory for all publicly issued debt instruments, Figure 5.3. Trends in Market Capitalization (In rupees crore) 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 N ov-1994 Sep-95 Jul-96 Ma y-97 M ar -98 Ja n-99 N ov-99 Sep-2000 Jul-01 Ma y-02 M ar -03 Ja n-04 N ov-04 NSE Exchange BSE Exchange ©International Monetary Fund. Not for Redistribution Narendra Jadhav 123 irrespective of their maturity. The role of trustees in bond and debenture issues has strengthened over the years. All privately placed debt issues are required to be listed on the stock exchanges and follow the disclosure requirements. However, despite the policy initiatives, corporate debt still constitutes a small segment of the debt market in India. Whereas the primary market for debt securities is dominated by the private placement market, the secondary market for corporate debt is characterized by poor liquidity, although this has improved in recent years. The developed financial markets are characterized by a sound financial and legal infrastructure, which is necessary for the development of a cor- porate bond market, supported by a well-functioning regulatory system. The United States is, by far, the most suitable example of a country whose corporate bond market is deep, efficient, and liquid. The bond markets in the United Kingdom and euro-area countries are also reasonably devel- oped. The markets for debt securities in Western European countries and Japan are much smaller than in the United States, not only in absolute terms but also as a percentage of GDP. Unlike the developed financial systems, the corporate bond market has a very short history of develop- Download 216.93 Kb. Do'stlaringiz bilan baham: |
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