RBI report on development of secondary market for corporate loans soon

New Delhi: The Reserve Bank is expected to come out with a report next month on facilitating development of secondary market for corporate loans.

The central bank had set up a task force to suggest policy and regulatory interventions required for development of secondary market in corporate loans, including loan transaction platform for stressed assets.

The secondary loan market in India is largely restricted to sale to asset reconstruction companies and ad hoc sale to other lenders including banks, but there is no formalised mechanism to deepen the market.

As part of efforts to further deepen the capital market, the central bank is also likely to release another report on housing finance securitisation by August-end. Sources said both these reports are expected by the end of the next month.

India's mortgage securitisation market is primarily dominated by direct assignments among a limited set of participants on account of various structural factors, impacting both the demand and the supply side, as well as certain prudential, legal, tax and accounting issues.

In terms of size, all the major segments of the capital market -- G-Securities, State Development Loans (SDL), corporate bond and equities –– have experienced consistent growth during the past few decades.

In May, the RBI had constituted two committees, one on the development of housing finance securitisation market and the other on development of secondary market for corporate loans.