Security Market

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A Decade of Reforms in Government Securities Market in India and the Road Ahead*

RAKESH MOHAN

I. INTRODUCTION It gives me great pleasure to deliver this keynote address at the Annual Conference of FIMMDA jointly organised by the Fixed Income Money Market Dealers Association of India (FIMMDA) and Primary Dealers Association of India (PDAI). Many of you would recall that the FIMMDA-PDAI conference held in Bangkok in 2002 was addressed by Governor, Dr. Y. V. Reddy when he was Deputy Governor. My address today is like a footnote to the comprehensive address given by Dr Reddy in Bangkok1 . He had covered a whole range of issues relevant for the development of the debt market including the need and motivation for development of domestic debt markets, the key issues relating to the development of the government securities market and also of the corporate bond market. He had emphasised the importance of the development of institutions and infrastructure such as the development of institutional investors, self-regulatory organisations, credit rating agencies, the relative roles of banks and bond markets, development of primary dealers, efficient clearing and settlement mechanisms and the like. More importantly, he had laid out the road map for the development of Indian debt markets in a very detailed manner for the following two years. I am here to really give you a progress report. First, it is very gratifying to see that most of reforms contemplated by him at that time have been completed. Second, as he had said, the development of the corporate debt market is different: whereas the government securities market has developed a great deal, the corporate debt market has a long way to go.

The development of any market needs a great deal of collaboration and consultation between regulatory authorities and market players. This has been achieved very…...

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