Infra, banking need Rs.10.4 trillion bond funding: CRISIL

Mumbai – India’s infrastructure and banking sectors will require Rs.10.4 trillion (nearly $170 billion) from the bond market over the next five years, according to a research report by CRISIL.

“The Rs.10.4 trillion bond funding required for these two sectors translates to an average issuance of Rs.2.1 trillion annually in each of th! e next five years. This is nearly 60 percent higher than the average an! nual issuances made by these sectors in the last three years,” said CRISIL managing director and chief executive officer Roopa Kudva.

“This calls for steps to deepen the bond market by encouraging greater foreign participation and by liberalising investment norms for long-term investors,” Kudva said in a statement.

CRISIL released a research report on Indian debt market that calls for a greater regulatory focus on deepening of the bond market, developing innovative credit-enhancement mechanisms for infrastructure projects, and building investor appetite for banks’ non-equity capital.

According to the report Indian bond market has witnessed sizeable growth in issuance and increasing participation by issuers and investors.

There have been several innovations in the bond market during 2013, including the first 50-year rupee bond and the first inflation-indexed debentures by Indian companies, five Basel III compliant issues by banks, and the launc! h of two infrastructure debt funds.

It is imperative to build on this foundation of growth and innovation to meet the sizeable funding requirements of the country’s infrastructure and banking sectors, Kudva said.

Infrastructure sector would need Rs.7 trillion from the bond market over the next five years, while banks would seek Rs.3.4 trillion non-equity capital under the Basel III regulations till March 2018, the report said.