Developing Indian Debt Markets

Indian Government securities market is one of biggest market but corporate debt market is still an insignificant player. But Why?

Let us start from the very beginning. The debt market comprises broadly two segments, viz., Government Securities Market and Corporate Debt Market. The latter is further classified as Market for PSU Bonds and Private Sector Bonds.

Some of the Structural Weaknesses in the Indian Primary Corporate Debt Market are:
• Lack of large and diverse investors
• Lack of dedicated intermediaries (Bond Manager)
• Heavy tilt towards private placement

Some of the Structural Weaknesses in Indian Secondary Corporate Debt Market are:
• Absence of Clearing Corporation and CCPS.
• Dedicated trading platform.
• Exclusive, well capitalized and professional intermediaries
• Lack of reliable and up to date information

Few of the issues & concerns for Indian debt market:
• Poor Quality Paper
• Inadequate Liquidity in the market
• The investor base in India is very small
• Incomplete access to information - There is no one place in India where one can have all the data pertaining to corporate debt issues. No one knows exactly how much debt is outstanding on any given date and different agencies have incoherent estimates for the same
• There is a perception in India that listed companies seek delisting owing to perceived regulatory arbitrage (additional cost on companies)
• Debt Versus equity: Cost and risks debt paper is offered and reoffered quite frequently by companies. In falling interest rate scenario, Corporate tend to borrow for shortest possible period thus restoring to repeated issue costs and interest rate risks

But all is not bad. The following are few recommendations for developing debt market:

• Widen Investors’ Base – Retail investors can be involved indirectly with the help of placing Bank (as done in Hong Kong). Clearing house should be linked to other countries to expand investor base.
• Transparency - There is need to create reliable and up to date Bond market information and Central Database
• There are no takers for repo transactions where corporate bonds are used as collaterals.
• Private placement of Corporate Debt should be regulated
• A Sound, Robust and Safe Market Infrastructure should be set up by shortening settlement lags and establishing a clearing corporation.
• Need for Regulatory Framework and effectiveness
• Securitization and structured instruments through use of derivatives - It can contribute to the development of corporate bond markets by overcoming the problems of the small size & low credit quality of most emerging market issuers. It can also be useful in identifying gaps and deficiencies in cash market infrastructures and foundations.
• There should be multiple trading platforms with central collection and dissemination of prices. This will ensure competition amongst players as well as liquidity. It should be ensured that no operational arbitrage arises

I find it quite awsum......

The Great Italian Motorbike Show

This video is sourced from: Diagnal View (Copyright). Fantastic film of Italian police riders putting on a motorbike display in the 50s. I hope you will love the kind of coordination exhibited. I simply love biking [:)]

Demystifying RG

Ok Ok I haven’t told you I am doing MBA…..RG ‘Relative Grading’ words to sune honge. Agar nahi here it is- Everyone in MBA education is given grades relative to how others have performed. It means if all have performed well or bad; everyone is going to get same marks. But as you must have figured out nobody forms a cartel. In MBA education RG is the "TWO letter" word….But why do we crib about it, why is it wrong? we alwayz crib that why is it here?, why everyone labels others that they are doing RG? Aren’t we all doing it all our life….

When we are born our parents soon start comparing us..our child should be best in sports, academics (though academics take precedence). I still remember Aunties used to talk. Mere bête ke itne number aaye, aapke bête ke kitne aaye. Main to apne bête ko khud padhati hoon,, wagarah wagarah

We even choose to do IIT or AIMS preparation because Tom, Dick and Harry are doing it… We never see what are we capable of? Or we chose to enter only those fields where our parents are working (Film fraternity, lawyers, businessman..)

Social status, materialistic things everywhere; even having a girl friend is like a peer pressure…though not quite visible in India (And all of this blame goes to Indian girls..[;)] )

Even MBA education teaches us do the benchmarking with your competition; it is competitive world…. Reliance, TATAs of the world, etc etc..

But all of sudden in MBA it becomes a ‘Common Word’. Is it really bad? I do not think so because everyone has its own nature; has its own speed; has its own capability. But nobody understands that. Most of the time our expectations from someone is too much that we can’t handle the situation that "usne mere saath aisa kiya".

Anyway my point is that RG should be there but it should be on the basis of hard work, intelligence; and NOT by the way of cheating, information asymmetry.

Because no matter how fast you run; You can’t win the race alone

Summers at Chennai - Part 1

Finally my summers got over. I am back at my college.. last 9 months of college life (sighhh )…..

I was doing my summers at Chennai. When I embarked on my summers, many said it will be tough, food, people, scorching heat wagarah wagarah. Ya there were few incidents (I am trying my best to remember those)

The best one was when I asked auto waala to take me to Airport, he took it for Egmore. And, Voila he took me to Egmore Railway Station

Whenever you go to any restaurant in Chennai there was waiting for atleast 30 min. They will not serve you water or even gave you spoon until you asked them umpteen times

Then every place is like a tongue twister and ends with ‘pam’ or ‘pakkam’… Kotturpuram…thoraipakkam…and awef pakkam…

But what made the stay Jhakas one wazzzzz the Gang…… We were around 15 people at Cognizant…( believe me CTS would still be doing their COST BENEFIT ANALYSIS and would still be thinking out how they have got truck load of NPA s… HR must be facing the muzic)

Be it IPL matches, TDS, Copper chimney or semifinals at pubs or visits at beaches, trips to Tirupathi or Pondicherry… the memories remained

My school friend Rajat once truly said “We meet to create memories but we depart to preserve them”

My first post

I was thinking of starting one from the days when I started preparing for my MBA exams...

Got inspired from one of my friend so here it is. Nothing great to write right now, so sharing a photograph that encapsulates nature

Just click the photograph.. and see the magic of nature