BIS Papers No 11: The development of bond markets in emerging economies - Y V Reddy: Issues and challenges in the development of the debt market in India

This paper discusses the issues and dilemmas faced in the development of the debt market in India. After narrating the country context, the profile of the debt market in terms of outstanding issues, instruments and participants is highlighted along with the institutional arrangements. This is followed by an articulation of the broad objectives of development of financial markets by the Reserve Bank of India (RBI). The subsequent sections consider the important issues faced by the RBI in the simultaneous development of the debt and money markets in India, the dilemmas encountered in its role as monetary authority and debt manager, its function as regulator vis-à-vis supervisor of the banking system and its role as regulator of debt markets. The penultimate section discusses the processes adopted in the implementation of reforms in the financial markets. The last section gives the medium-term outlook for debt market reforms.