Allowing infrastructure bonds trading can't deepen debt market: S S Mundra

MUMBAI: The Reserve Bank today reiterated that it will not allow infrastructure bonds to be traded, as it does not feel such a move will help deepen the country's nascent corporate debt market.

Allowing trading of bonds issued for infrastructure lending will not help deepen debt markets, the newly-appointed Reserve Bank deputy governor S S Mundra said at an industry summit here.

The RBI had said last month that the trading of such bonds was not permitted. In July, the central bank had allowed long-term bonds raised by banks for infrastructure lending to be exempted from mandatory reserve requirements such as CRR and SLR.

Responding to a question from the audience that infra bonds are not picking up because banks are the under-writers of these bonds and therefore allowing banks to hold these bonds in the held-for-trade (HFT) category would help tide over this, Mundra said the market will not be deepened if only a few players stay in it.

"We need more players to come up so that risks are diversified. If the same players keep on taking the risk from each other then you have the same risk concentration and it doesn't serve the widening of the debt market," Mundra said.