In a bid to deepen the corporate bond market, the government is working on setting up a ‘backstop facility’ as announced in the Budget, a senior government official said on Friday.
Speaking at an event organised by CII, Additional Secretary, Ministry of Finance, Anand Mohan Bajaj, said the government, in consultation with the Reserve Bank of India (RBI), had raised the foreign investor participation ceiling in corporate bonds from 9% to 15%. “We are working on a very comprehensive facility. It will certainly instil confidence among the participants in the corporate bond market,” he said.
Based on a proposal from markets regulator SEBI, an announcement in the Budget for 2021-22 was made with regard to the creation of a ‘backstop facility’ that would purchase investment-grade debt securities both in stressed and in normal times, and aid the development of the bond market.
Mr. Bajaj added the Centre was also working on framing an investor charter that would focus on the rights and responsibilities of investors as also a grievance redressal mechanism.
‘More transparency’
The investor charter will not only help bring in more transparency in the investment process but also encourage investors to invest with better knowledge.
Speaking at the event, Principal Economic Adviser Sanjeev Sanyal said the government and RBI are working on inclusion of Indian sovereign bonds in global bond indices and some announcement in the space is expected during the year.
