Developing the Market for Corporate Bonds in India

35 Pages Posted: 14 Mar 2012

See all articles by Vikramaditya S. Khanna

Vikramaditya S. Khanna

University of Michigan Law School

Umakanth Varottil

National University of Singapore (NUS) - Faculty of Law

Date Written: March 13, 2012

Abstract

The corporate bonds market is not only underdeveloped in India in comparison with the equity market, but also considerably lags that market in point of time. Despite various efforts, the corporate bonds market has not expanded to any meaningful extent. In this paper, we identify the elements of an appropriate legal framework that undergirds a liquid and vibrant corporate bonds market. These elements are the proper and timely enforcement of contracts, a robust corporate insolvency framework, standardization and transparency in the primary markets, and greater protection against opportunistic behavior between creditors and borrowers. Our central argument in this paper is that the weaknesses in these elements in India amount to legal impediments that inhibit the smooth operation of the bonds market in India. Consequently, any reform process ought to address these legal impediments.

Suggested Citation

Khanna, Vikramaditya S. and Varottil, Umakanth, Developing the Market for Corporate Bonds in India (March 13, 2012). Available at SSRN: https://ssrn.com/abstract=2021602 or http://dx.doi.org/10.2139/ssrn.2021602

Vikramaditya S. Khanna

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-615-6959 (Phone)

Umakanth Varottil (Contact Author)

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

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