Facility to deepen corporate bond market on anvil: official

‘Purchase of investment-grade debt will get a boost’

In a bid to deepen the corporate bond market, the government is working on setting up a ‘backstop facility’ as announced in the Budget, a senior government official said on Friday.

Speaking at an event organised by CII, Additional Secretary, Ministry of Finance, Anand Mohan Bajaj, said the government, in consultation with the Reserve Bank of India (RBI), had raised the foreign investor participation ceiling in corporate bonds from 9% to 15%. “We are working on a very comprehensive facility. It will certainly instil confidence among the participants in the corporate bond market,” he said.

Based on a proposal from markets regulator SEBI, an announcement in the Budget for 2021-22 was made with regard to the creation of a ‘backstop facility’ that would purchase investment-grade debt securities both in stressed and in normal times, and aid the development of the bond market.