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India needs deeper bond market to improve liquidity options: Centrum's Jaspal Bindra
Centrum's Jaspal Bindra (left) with Mosaic Digital CEO Jaideep Mehta

As resolution efforts via the Insolvency and Bankruptcy code gain traction, several global practices need to be adopted in India to deepen the debt market, Jaspal Bindra, executive chairman of the Centrum Group, said in a fireside chat at the News Corp VCCircle Stressed Assets Investment Summit.

“Globally, wherever the bankruptcy law has been implemented, you see a deepening of the bond market. I think we can expect to see that to happen in India as well,” Bindra said in an interview with Mosaic Digital CEO Jaideep Mehta.

“India is one of the few countries globally where the equity market is several times larger than the debt market. Everywhere else outside India the debt market is a multiple of the equity market. So that correction is needed and will come,” he said.

Globally, a lot of the debt is insured and then reinsured so that there is a safety net for lenders and borrowers. In India, because of the bilateral arrangements, there has not been much scope for insurance companies to play a role, but this could change in time, Bindra said.  

Other instruments that can be introduced in India include complex tools of debt syndication and securitisation of assets, Bindra said.

Broadly, Bindra felt that the IBC was a “redeeming piece” of reform for the country and a much needed boost for the investors and the economy.

However, he conceded that the timeline for resolution of assets is a challenge.

“Fifty percent of IBC cases that have been admitted are over the 180-day deadline. Thirty per cent of them are past 270 days. So they are well past the deadline that they were supposed to be resolved in,” Bindra said.

There is still a fair amount of ambiguity over regulations. These points of contentions are likely to become exacerbated as there are only 11 NCLT courts across the country and the number of cases filed with the NCLT are expected to rise by three or four times over the next couple of years, he said. 

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