RBI reforms needed for debt market: Assocham

Industry body Assocham on Monday asked the Reserve Bank to roll out measures for strengthening the debt market in its upcoming monetary policy.

"... in order to maintain stability in the market, the premier bank should allow liberal participation of institutional players such as foreign institutional investors in debt market," a survey of over 300 CEOs by the chamber said.

The scope of interest rate reduction is limited despite the government's announcements for heavy borrowings, it said that RBI should roll out reform measures for strengthening the debt market in its policy.

Under current circumstances whosoever possess debt instruments are not releasing them in the market because of limited yield. "Reforms in debt market, therefore, would help release such commercial papers as their yield will have increased," it added.

"We expect status quo in existing (key policy rates) cash reserve ratio, repo rate and reverse repo rate, even though the finance ministry already announced its heavy borrowings programme for first half of current fiscal," Assocham President Sajjan Jindal said.

RBI in its annual policy, which was announced in April with a view to stimulate growth, had slashed short term lending (repo) and borrowing (reverse repo) rate by 25 basis points each.