RBI for improving data integrity to develop corporate bond market The Reserve Bank of India (RBI) deputy governor, T Rabi Shankar, on Wednesday underlined the need to improve the level of transparency and increase the speed at which information and data in the corporate bond market move. This can be effected by elevating such disclosures akin to those maintained in the government market securities, he added. “There has been feedback from market participants about the need for improving the timeliness and integrity of data on primary and secondary market transactions in the corporate bond market. This is arguably a low hanging fruit which we can aspire for,” Shankar said. Also read| Looking for safe & secure investment options? Here’s how fixed-income assets can help diversify your portfolio Additionally, there is a need for adoption of uniform valuation methodology across investors, ideally through an independent benchmark administrator, he said. The deputy governor stressed the necessity for diversifying the investor base, improving the access of lower-rated issuers and developing complementary markets, beyond which market development will be a continuous effort. Despite these measures, market participants should dilute expectations on the level of liquidity that secondary corporate bond markets will be able to achieve, Shankar said. Also read| Banks’ AT-1 bond issuances may dip to Rs 20,000 crore “If international experience is anything to go by, the best we can achieve may be well short of the liquidity we are used to in government bond markets or equity markets,” he said. While Sebi is making efforts to develop secondary corporate bond market, there are certain constraints such as ‘buy and hold’ nature of investors and the predominance of private placement. The investor profile also impacts the liquidity in the corporate bond market as it is largely dominated by institutional investors, which incentivises ‘buy and hold’ strategy, Shankar said. In FY22, the amount raised via public issuances of corporate bonds was about 2% of the amount of private placement. Sebi is trying to facilitate the setting up of a repo clearing corporation to develop repo market for corporate bonds that will improve liquidity in the market. The corporate bond market is dominated by high-rated companies, Shankar said, citing data that out of the rated bonds issued in FY22 to the tune of Rs 22.6 trillion, 80% were rated AAA and another 1.5% were rated AA.
If the current trend continues for a longer period of time, not only oil mills but oilseeds growers will also not be able to get good rates of their produce, says Samir Shah, president of Gujarat State Edible Oils and Oil Seeds Association (GEOA). Shah who is also past president of SOMA says that due to various international factors rates of edible oils had gone up considerably, especially imported oils earlier this year.
“With a view to curb rising prices of edible oil, the Government of India reduced import duty on edible oils. Considering the fact that India is producing hardly 30 percent of its edible oil requirement, the decision was right at that point of time. Now when international prices of edible oils have gone down by 15 percent to 25 percent and high production period has started in edible oil exporting countries, the government should gradually increase import duty to protect local oil mills and oilseeds growers,” said Shah. GEOA has also made representation before Union Minister for Commerce & Consumer Affairs, Piyush Goyal to increase import duty.
In June import duty on edible oils was ranging from 35 to 55 percent, since then the government gradually reduced import duty and at present it is ranging from zero percent to 15 percent on different edible oils, he said.
Just a month back prices of edible oils were through the roof and the government took appropriate measures by reducing import duty in order to protect consumers, says Atul Chaturvedi, president of Solvent Extractors Association of India (SEA). “Prices of edible oils are coming down globally. Kharif sowing has already started across the country. In the interest of local farmers, it is high time to enhance import duty in a phased manner to encourage local edible oil value chain,” opined Chaturvedi.
On Thursday imported Palm oil prices were at around Rs 2100 per 15 kg as against local Rs 2700 and Rs 2550 of groundnut and cottonseed oils. Prices of other local oils including ricebran, coconut, soyabean and mustard remained as high as Rs 2350, Rs 2520, Rs 2500 and Rs 2580 respectively.
India imports around 13-13.5 million tonnes of edible oils, of which around 8-8.5 million tonnes (around 63 per cent) are palm oil. Though the price of other imported Sunflower oil remained at around Rs 2700 per 15 kg, but import quantity of the oil is much lower than that of palm oil.