RBI Deputy Governor, Shyamala Gopinath, who is said to be retiring, has expressed that the ‘Central Bank is keen on developing the corporate bond market’.

Gopinath was made the Deputy Governor of the RBI on the 21st of September 2004 for five years, as she ended her term, she was re-appointed for another term, which ends on the 20th of June 2011.

However, all the segments of the system that is interested in corporate bonds, either the issuers or the investors or the bankers, have not been able reveal what RBI requires to do, in order to develop the corporate bond market in terms of the regulatory environment.

Also, there are other factors that are militating against the bond market, which needs to be tackled and may involve the macro environment in India in terms of the interest rate scenario.

Credit enhancement or allowing banks to guarantee bonds, is said to be an immediate way of handling the problems, though Gopinath stated, “they are not interested in development of a corporate bond market that again relies on bank guarantees for development”.

Though, banks have been allowed to do credit enhancement, which is a market instrument, and being a ‘credit rating processes, other problems ‘like the issuers very often saying that don’t ask banks to market the bonds’ tend to be coming up.