Bankruptcy Code a predominant requirement to deepen bond market: RBI

MUMBAI: The Reserve Bank of India ( RBI) is looking at developing a bond index and setting up a new trading platform for repos and corporate bonds to deepen the bond marker, the deputy governor of the Reserve Bank of India, H R Khan said on Monday. However he added that "A sound and a robust Bankruptcy Code is predominantly required for a vibrant bond market."

Speaking at a seminar organised by FICCI, Khan said, "We want to ensure that not just the law is in place but also process is in place."

The steep rise in bad load coupled with poor record of recovery from defaulting corporates has been a issue of concern for bankers and regulators. . In the last three years, the total stressed loans – restructured loans and non-performing assets have touched double digit. Data collected by ETIG shows that bad loans have jumped sharply to Rs 3.11 lakh crore in 2014-15 from Rs 92,515 crore in 2010-11.

Speaking at the same seminar, Manoj Joshi, joint secretary department economic affairs said "Beyond AAA space and quasi sovereigns if the corporate bond has to grow, the bankrupcy code should be there."

Joshi said, that the T K Vishwanathan Committee on Bankruptcy Code is in final stages and government is keen to present the Bankruptcy Law in the winter session.

He said that for the first time a comprehensive law has been planned. "We are putting a lot of focus on administrative mechanism by which the bankruptcy enforcement could take place"

He said the government is also focusing on increasing to pools of funds. "We don't really have the pools of funds which could invest in bond market. We have very few players like banks, LIC and other insurance companies, EPFO and other provident funds, NPS, MF and FIIs. but their investment horizon is very short term.