Indian debt market mainly comprises trading of bonds. In finance, a bond is a debt security, in which the issuer owes the holders a debt and is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity.

1. HISTORY OF INDIAN
DEBT MARKET

2. CONCEPT
Indian debt market mainly comprises trading of
bonds.
In finance, a bond is a debt security, in which the
issuer owes the holders a debt and is obliged to pay
interest to use and/or to repay the principal at a later
date, termed maturity.

3. Components
Investors
Regulators
Debt market segments
Major classification
G-sec
Corporate

5. HISTORY
The Indian debt market has traditionally been a
wholesale market with participation restricted to few
institutional players – mainly banks.
The turnover in the debt market
too was quite low a few hundred crs till the early
1990s.
The debt market was fairly underdeveloped due to
the administrated interest rate regime and the
availability of investment avenues which gave a higher
rate of return to investors.

6. In the early 1990s, the government needed a large
amount of money for investment in development and
infrastructure projects.
 The government realized the need of a vibrant,
efficient and healthy debt market and undertook
reform measures.
In 1991,abolition of tax deductions at source on G-
secs, permitted foreign institutional investors to invest
in bebt instruments.
The discount and finance house of India along with
public sector banks were accredited as primary
dealers.

8. The narasimham committee recommendation
Gradual introduction of other players, local and
foreign and PD operations gathered momentum post
1996.
Government securities form the oldest and most
dominant part of the debt market in india.

9. EVOLUTION
In recent past local bodies such as municipal
corporations have begun to tap Indian markets for
funds.
Now, why for funds ?
Because the central government mobilises funds
mainly through issue of dated securities and T-bills,
while state governments rely solely on state
development loans.
To meet statutory requirements banks, insurance
companies and financial institutions invest.

10. The gradual withdrawal of budgetary support to PSUs
by government since 1991 has increased their reliance
on the bond market for mobilizing resources.
The Indian corporate sector relies, to a great extent,
on rasing capital through debt issues, which comprise
of bonds and CPs.

12. EVOLVED
Now, bonds issues are being placed through private
placement route, these bonds are structured to suit
the requirements of investors and issuers.
Securitized products, corporate bond strips and
variety of floating rate instruments with floors and
caps are innovations in corporate bond market.

13. Recently there is increase in insurance of corporate
bonds with embedded put and call options. While
some of these are traded in stock market, the
secondary market for corporate debt securities is yet
to fully develop.
It also has a large non-securitized, transactions-
based segment.

14. ACKNOWLEDGMENT
A HEARTY THANK TO PROF.MITUL FOR PROVIDING US
WITH THIS ENLIGHTING AND INTRESTING TOPIC TO
PRESENT ON.
Thank you sir.