Deepening the bond markets

14 FEB,2021 | MEDC


 

On the occasion of presenting the latest monetary policy review, the RBI has given retail investors direct access to the government securities markets – a move termed by Governor Shaktikanta Das as a major structural reform. With this, India will be only the third country in the world (after the USA and Brazil) where retail participants can take direct exposure to the government bond market. This move is in line with the underlying philosophy of the recently presented Union Budget, wherein the government is aiming to borrow huge amounts from the markets. After all, domestic investors, if tapped strategically, can be a powerful source of resources for a fund-strapped government. All kinds of innovative financing mechanisms now need to be explored, and the RBI has moved in the right direction by attempting to bring retail to the bond market, which will automatically help to deepen it. This is a positive step towards eventually developing the nation’s corporate bond market, something that is most urgent. 

*Photo Credit: Google

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