The markets regulator plans to overhaul the corporate debt market by pushing all issuance onto an electronic platform as early as November.
The Securities and Exchange Board of India (SEBI) plans to overhaul the corporate debt market by pushing all issuance onto an electronic platform as early as November, the Reuters reported quoting sources.
The SEBI will announce the proposal drafted by an internal regulatory panel within a few weeks, and seek market feedback, said sources, who declined to be named as the plan is not yet public.
India would be among the first countries to move online, one of the sources said, in a radical shift that comes after investors called for increased supervision of a $225 billion market dominated by a handful of heavyweight issuers.
The regulator believes an electronic platform for new issuance - as opposed to the current over-the-counter system - improves transparency and thus investor confidence in the sales process. It should attract more buyers, including foreign investors, which in turn would lure in more issuers, they said.
That would fit the government's goal of bringing in new sources of cash and fostering cheaper credit to help companies invest, at a time when the economy is still struggling to take off despite lofty official growth numbers, the Reuters article stated.
Banks, the most common source of cash for many Indian firms, are burdened with $50 billion of bad debt.
"Transparency is the most important factor which is driving the need to move the private issuance market to an electronic platform," one of the sources was quote in the article by Reuters.
"Currently one doesn't really know what is going on, how the arrangers solicit deals."
SEBI did not immediately provide comment to Reuters.
Almost 90 per cent of corporate bond issuances in India are in effect private placements. Issuers hire investment banks to find buyers, much like how debt is sold in many other countries.