of the issues and challenges faced by this market and the approach to be adopted to address them in order to enable the market to reach its potential. the task before us is to improve liquidity, enhance transparency, provide safe and sound market infrastructure, enable appropriate institutional structure, such as, robust bankruptcy framework, etc. the regulators have taken proactive steps and provided the market with tools of risk management. efforts are on to enable wider participation the market and create scope for market making. the regulators, like reserve bank, have always followed a consultative approach and welcomed suggestions from the stakeholders. it is also expected that the market participants need to be more active and participate in corporate bond market and make use of risk management tools / financial products. this would enable growth of the corporate bond market and cater to the needs of the real economy and the financial sector. i am sure that the panellists of the next session would deliberate on some of the issues raised above and other related issues and provide useful and implementable suggestions to meet the challenges of developing a more vibrant corporate bond market in india. i once again thank ficci for giving me this opportunity to share my thoughts on such a topical subject. bis central bankers ’ speeches

directly or indirectly. improving liquidity low liquidity is an issue that needs to be addressed urgently. several reports have suggested consolidation of the corporate bond issues through reissues to promote liquidity. we need to make a beginning in this area by involving psus and large corporate with significant volumes of bonds outstanding in devising a suitable scheme of consolidation of their issues. there are suggestions to the effect that in respect of regular issuers that there could be restriction on the number of securities they can issue in a year so that reissues would become necessity. market making banks and pds have played the role of market making in the g - sec with reasonable success and we need to explore the possibility of replicating the experience in the corporate debt market as well, albeit with the realisation that primary dealers would be exposed to greater credit risk if they carry a sufficiently large inventory of corporate bonds that is needed for market making. moreover their limitation to increase exposure to corporate bonds with the context of growing issuance size of government bonds has to be kept in view. some suggestions to incentivise pds for market making are, however, being discussed with the stakeholders. further, there is a need for a debate on creation of a separate agency / institution to promote market making in corporate bonds, on the lines of institutions established to promote government securities market. credit derivatives in the context of development of the corporate bond market and promoting infrastructure funding, cds has been introduced with all safeguard, such as, not allowing naked cds for the users, mandating position limits for the market makers, compulsory reporting of transactions to the trade repository in ccil, etc. and high expectations. cds could provide an avenue for participants to mitigate credit risk and enable effective redistribution of credit risk within the system. with the necessary infrastructure that included trade repository, documentation, publication of cds curve for valuation, standardisation of contracts, etc. in place, participants were permitted to enter into cds with effect from december 1, 2011. though the guidelines were framed after detailed discussions with the market participants, only few trades have taken place since the launch of the product. some of the reasons being attributed are difficulty in signing separate credit support annex ( csa for india ), nonavailability of netting benefits and posting of collateral on daily basis. bothe sebi and irda are likely to permit their regulated entities to participate in cds as users soon. these are not major operational issues and should not deter market participants from undertaking trades. stringent capital ad