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Drastic changes needed to develop debt market, says former SEBI chief UK Sinha

Updated : November 18, 2019 07:00 PM IST

Acknowledging that "lack of a good debt market is a national problem", former SEBI chairman UK Sinha said that there was a need for drastic changes to develop the same.

“We need some drastic changes in the way we can develop the debt market... there are dozens of reports pointing out how that should be done and corporate bond market can develop only on the back of very vibrant government bond market," said Sinha in an interview with CNBC-TV18.

On whether or not there is a possible resolution for the NBFCs under the insolvency and bankruptcy code (IBC), he said, "Global experience is that financial sector companies require different set of rules."

“The government is incrementally trying to test the waters," said Sinha, adding that some financial sector companies can be tackled through IBC mechanism.

Talking about loans against shares, he said, “In hindsight, maybe things could have been looked at more promptly and timely but the good thing is that at last, things are under control so far as the regulatory regime is concerned and my feeling is that the new changes which Securities and Exchange Board of India (Sebi) has brought about, for example: liquid funds must be having 20 percent in liquid assets, the sectoral caps have been reduced, must-have investments only in listed commercial papers (CPs) and non-convertible debentures (NCDs), graded exit load for first 7 days... I think these will provide a lot of comfort and safety to the investors."
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