instruments would provide a big fillip to the market as it would improve risk transference and diversification and provide liquidity to the issuers. subjecting income of spv to tax hampers the growth of securitized debt. market participants have been demanding that the taxation structure in securitized debt needs to be changed from distribution tax at spv level to taxation in the hands of investors. rationalisation of stamp duty norms 23. in terms of the provisions of entry 91 of union list, the central government has the power to levy stamp duty on issue of debentures. however, some state stamp laws also bis central bankers ’ speeches provide for duty on issue / transfer of debentures. stamp duty laws need to be rationalised to provide an incentive to issuers and work is already on in this direction. use of corporate bonds a collateral 24. post global financial crisis has seen large scale use of non - sovereign papers as collateral by the central banks for providing liquidity during periods of stress. similar enabling arrangement in india, subject of course to appropriate haircuts and other safeguards, could be examined. this will enhance the demand for good quality corporate paper. instruments activating the repo market 25. the reasons cited for lack of interest in corporate bond repo include non - signing of the global master repo agreement ( gmra ), lack of lenders such as mutual funds and insurance companies in repo market, etc. reserve bank is engaging with other regulators to address these issues. it is also envisaged to widen the participation base in corporate debt repo by allowing more investors in repo market. 26. internationally, gmra is the standard document used by the market participants to undertake repo transactions. in india also, we have adopted the same document. market participants need to highlight the specific issues in gmra which need to be addressed. kickstarting cds market 27. unavailability of credit risk transfer mechanism in the corporate bond market works as a deterrent. though cds has been introduced in india, there is no activity in the market. one of the major constraints is restriction on netting of mtm position against the same counterparty for capital adequacy and exposure norms. without netting, the trades in cds have become capital intensive as banks and pds have to provide higher capital charge on gross basis even if they are acting as market makers and having positive and negative position against the same counterparty. netting has not been allowed due to

totally detached from the sovereign bond market. corporate bond market may get a fillip as the interest rates come down and the fiscal deficit targets are achieved. the play on spreads across the credit curve will become more attractive. 3. alongwith recognizing the hard facts comes the realization that there are not many low hanging fruits remaining to be plucked – work forward is contingent on multifarious factors and some hard policy choices. bis central bankers ’ speeches 4. there have been a number of reports on the corporate bond markets, viz., r. h. patil committee report ( december 2005 ), report of the high powered expert committee on making mumbai an international financial centre in 2007 ( percy mistry committee ) and a hundred small steps [ report of the committee on financial sector reforms ( cfsr ) ] in 2009 ( raghuram rajan committee ), reports of the city of london, which have examined in detail various aspects related to the development of corporate bond market and have made useful recommendations. it has been recently decided by the financial stability and development council ( fsdc ) and its sub - committee that the issue needs to be looked into its entirety. an inter - regulatory group has already started work in this direction. the focus of this group will be to distill key actionable recommendations made by all earlier committees and suggest a time bound plan for implementation of the same. measures taken to develop the corporate debt market 5. taking into account the recommendations made by various expert committees, several measures have been taken by the government of india, the reserve bank of india ( rbi ) and the securities and exchange board of india ( sebi ) for the development of corporate debt market in india. the success of these measures in achieving the intended outcomes has, however, been varied. impact of some of the measures taken is captured below : intended outcomes mostly achieved • setting up of reporting platform for post - trade transparency • introduction of dvp in settlement of otc trades in corporate bonds to eliminate settlement risk • issue of long - term bonds by banks allowed with a minimum maturity of seven years to raise resources for lending to ( a ) long term projects in infrastructure sub - sectors, and ( b ) affordable housing. these bonds have been exempted from computation of net demand and time liabilities ( ndtl ) and are therefore not been subjected to crr / slr requirements • the investment limit for foreign portfolio investors ( fpi ) has been increased to usd 51 billion during the last few years.