a reliable government securities market and the availability of robust reporting, trading and settlement mechanisms would lead to a rapid development of a vibrant corporate debt market. a framework for the development is already available through the recommendations of the patil committee, the implementation of which has already been taken up by the various agencies. in support of my optimism in this regard, let me quote from a recent working paper of oecd : “ … well functioning government securities markets give public support to private fixed - income market ( both cash and derivatives ) in the form of pricing benchmark, while they also provide a tool for interest rate risk management. for these reasons, the development of a well functioning government bond market will often precede, and very much facilitate, the development of a private - sector corporate bond market … ” ( new strategies for emerging domestic and sovereign bond markets, working paper no. 260, oecd development centre, april 2007 ) as regards, policy challenges in india, they may be similar to those identified by a recent report of the committee on global financial stability ( cgfs ). “ three important policy challenges that remain are : to improve market liquidity of the new markets ; to encourage greater private sector issuance ; and to spread the risks of bond investment more widely. ” ( financial stability and local currency bond markets, cgfs paper no. 28, bank for international settlements, june 2007 ) let me conclude with this optimistic note on the development of the corporate debt market also in india, sooner than the expectations of many in the financial markets. thank you.

taken in recent years. first, initiatives have been taken to widen the investor base for the government securities. traditionally, commercial banks and insurance companies have been the largest holders of government securities. major part of the holdings of these investors is generally in the nature of statutorily mandated investments. the entry of mutual funds and non - banking finance companies in recent years has broadened the base. in addition, the entry of 100 per cent gilt mutual funds has broadened the potential for retail investor base. to enable small and medium sized investors to participate in the primary auction of government securities, a “ scheme of non competitive bidding ” was introduced in january 2002, which is open to any person including firms, companies, corporate bodies, institutions, provident funds, trusts, and any other entity prescribed by rbi. the scheme provides for allocation of up to 5 per cent of the notified amount at the weighted average rate of accepted bids. with a view to further promoting liquidity in the secondary market and to strengthen the emergence of a benchmark yield curve across maturities, re - issuances of benchmark securities have been in place for quite some time. in furtherance of the objective, a scheme of active consolidation of government securities through buy - backs was finalized. this is expected to be implemented during the current financial year. the settlement system for transactions in government securities was standardised to t + 1 cycle with a view to provide the participants with more processing time at their disposal and therefore, to enable better management of both funds as well as risk. in order to provide banks and other institutions with a more advanced and more efficient trading platform, an anonymous order matching trading platform ( nds - om ) was introduced. the nds - om is an additional facility available to the participants and the participants continue to have the option of using the current telephone - trading platform. the settlements of both types of transactions are, however, integrated. recently, in 2006, short sale was permitted in dated government securities to provide an opportunity to market participants to manage their interest rate risk more effectively. this measure is expected to further improve liquidity in the secondary market. “ when issued ” ( wi ) trading in central government securities was also introduced in 2006. this is expected to contribute significantly to distributional efficiency in primary issuance, in addition to permitting pds to manage their auction risk more effectively. there is a fairly active interest rate derivative market in india. the market started with rbi permitting interest rate swaps and forward rate