Primary debt market

A liquid and vibrant debt market is an essential component of a mature securities market. While there has been increased activity in primary debt issues, the secondary market for debt is yet to become active. The entry of the FIIs into the debt market, the launching of fixed income schemes and money market schemes by the mutual funds is expected to activate the debt market, but further steps would need to be taken to make the debt markets vibrant. An important development that will facilitate the development of debt markets is the progressive deregulation of interest rates, the greater reliance on borrowing at market rates by the government and other quasi statal issuers, the greater use of open market operations as a tool for monetary policy and improved procedures for the trading, clearing and settlement of debt securities.

During 1995-96, the total amount raised through issues of bonds and debentures that were filed with SEBI at Rs.5,743 crore representing 27.6% of the total issues made during that year. During 1996-97, the total amount raised through bonds and debentures at Rs.6,286 crore represent 44% of the total issues made during the year. It would be seen that during 1995-96 the number of NCD and PCD/FCD issues as well as the amount raised were significantly higher than those made in 1996-97. As mentioned earlier there were several bond issues in 1996-97 mainly from the financial institutions which contributed to the increased amount of capital raised through such issues compared to the previous year. Details of funds raised through debt issues filed with SEBI in 1995-96 and 1996-97 are given in Table 6.

Table 6: Capital Raised through Debt issues filed with SEBI (Rs. Crore)