Shift from bank-dominated financial system to a more diverse financial system where corporates can access finance from capital markets would address the funding needs of businesses, the Economic Survey said.

“Some of the issues...include drawing up a roadmap for a structural shift from a bank-dominated financial system to a more diverse financial system where top-rated corporates access finance from capital markets,” the Survey said. Strengthening the legal framework for regulation of corporate debt by amendments in rules, relaxation of investment guidelines for pension, provident, and insurance funds to enable participation of long-term investors in corporate bond market are also needed.

Bringing new products and making nascent products such as covered bonds, municipal bonds, credit default swaps, credit enhancements, and securitisation receipts more attractive may be considered for public issuance of bonds at reduced cost, it said.

“Improving the market infrastructure for enabling liquidity, transparency in price discovery, and stimulating growth in trading volumes also need to be suitably addressed.”

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