Lok Sabha Question No. 278 (STARRED), answered on 2021-03-15
Subject: Bond Market
Ministry: FINANCE
Asked by: Meenakashi Lekhi

## Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA STARRED QUESTION NO.*278

TO BE ANSWERED ON MONDAY, MARCH, 15TH 2021/ Phalguna 24, 1942 (Saka)

## BOND MARKET

- *278. Smt. Meenakshi Lekhi

Will the Minister of FINANCE be pleased t0 state:

- a) the measures being taken by the Government to develop the bond market in the country to help increase in access of capital to private companies:
2. b the measures taken by the Government to incentivise foreign investment; being
- c) whether the Government plans to introduce diaspora bonds to create an avenue for the Indian diaspora to invest in India; and
4. (d) if so, the details thereof?

## ANSWER MINISTER OF FINANCE (SMT.NIRMALA SITHARAMAN)

- (a) to (d) : A statement is laid on the Table of the House.

*****

Statement   referred to in the reply to part (a) to (d) of the LOK SABHA Starred Question no *278 raised by Smt. Meenakshi Lekhi due for reply o 15th March, 2021 regarding "Bond Market" .

(a): The Government of India, in coordination with Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) has taken various steps to develop the bond market with a view to facilitate increased access to capital for the body corporates including private companies. Some such measures taken in the recent past are detailed below:

- With effect from January 2020. listing of commercial papers has commenced on stock exchanges to help companies raise short term debt;
- iii. In August 2019 Government has removed Debenture Redemption Reserve (DRR) to reduce the cost of issuance for companies:
- ii. With effect from July 1, 2020, the rate of stamp duty for issue of corporate bonds has been   reduced to 0.005% and reissue to 0.0001%. Same   rate of 0.0001% would apply to repo transactions on a uniform method of collection through stock exchanges and depositories has been in place put
- iv. The time taken for listing in case of issue of debt securities has been reduced to 6 working days from 12 working days and for privately placed securities to 4 from 15 days from the date of closure of issue: This was done to make the existing issuance process easier, simpler and cost effective for both issuers and investors. public days
- RBI has allowed banks to Corporates/special purpose vehieles (SPVs)
- RBI has extended Long Term Operations (LTROY Targeted Term Operations (TLTRO) to banks for extending loans to investing in corporate bonds ofl targeted sectors during the pandemic from February 2020 to April 2020. Repo LongRepo period
- vi. Bilateral   Netting of Qualified Financial to provide a firm legal basis for bilateral netting So as to enable banks to rationalize their] credit exposure to over the counter (OTC) derivatives and to help in the development of Credit Default Swap market  which is critical  for the development of corporate| bond market in India.
- viii. The Union Cabinet has recently its approval to the proposal for equity infusion by Government of Rs 6000 crores in NIIF Investment and Infrastructure Fund (NIIF) which can play a major role in infrastructure   financing and development of Bond Market in India by acting as AAA/AA-rated  intermediary between the bond markets infrastructure   projects and companies given and

b): To promote Foreign Direct Investment (FDI) the Government has in place an enabling and investor  friendly FDI Policy. wherein most  sectors are open for 100% FDI under the Automatic route, subject to applicable sectoral laws, regulations  rules  security conditions and state/local lawshregulations. The Government reviews the FDI policy o an ongoing basis and makes significant changes from time to time, to ensure that India remains an attractive investor friendly destination. Recently, foreign investment in Insurance intermediaries and Defence industry has been raised from existing 49% to 100% and 74% put respectively: under automatic route. Further; RBI in consultation with notification dated March 30. 2020 increased Government has vide the limit for Portfolio Investments (FPI) in corporate bonds to 15% of outstanding stock for FY 2020-21 from the earlier 9%/ limit. A new investment channel called the Fully Accessible Route was introduced April 2020 to make available certain with effect from limit for specified Central Government securities without any non-resident investors  Voluntary Retention Route (VRR) Was introduced in March attracting term investment: To attract wealth funds (SWF) and Global more investments from Sovereign Pension fund (PF) which account for one of the largest pools bf global Capital. Income on Investments made by SWF and PF in infrastructure have been made eligible for Income Tax upto 2024 exemption by Finance Act 2020 and further, the scope of these exemption been proposed to be widened by Finance Bill, 2021 . Development Cells (PDCs) have been formed in ministry and an EGoS Project solving their problems. investors in Foreign long foreign have every Group

(c) & (d): The government has plans, as on date, to introduce bonds. no diaspora

*******