Foreign Investments In Bonds May Ease: SEBI

New Delhi: The Securities and Exchange Board of India (SEBI) expects limits on foreign investments in corporate bonds to ease as the bond market volumes grow in the coming days.

“There is an appetite for bonds. There are limits on foreign participation in bond market at this point of time. You will see that moving away as you see the market developing,” M Damodaran, SEBI Chairman, said at the Fortune Global Forum 2007 here.

He said the bond market was likely to be institution-driven and retail investors would come in, if at all, at much later stage in the growth of the market. Damodaran also said that he expected better numbers (volumes) in the bond market over the next 12 months.

Admitting that India was a late-starter in fixed income market, he highlighted that the trading in corporate bonds had got started few months ago.

“There were issues like who would regulate what piece of the action. All of those issues have been put behind us. We know who will do what. In terms of the Patil Committee recommendations, from SEBI’s point of view, we have either completed or in the process of implementing them. Clearly you will see progress there”, he said.

Meanwhile, the SEBI Chairman said that the regulations on securitisations were to be finalised by end-December. He also said that SEBI was re-writing all its regulations and was taking the help of lawyers for this purpose. “We are also trying to reduce the number of regulations,” he added.

Later, Damodaran told reporters that over time, the limits placed on foreign investments would get increased as the bond markets exhibit growth. “I am not the one who will increase the limits. Other persons will raise it. This will happen over time as the market develops”, he said.

Under existing norms, foreign investors can invest upto $ 3.2 billion in government bonds and up to $ 1.5 billion in corporate bonds per year.

Damodaran also indicated that the capital market regulator would allow introduction of more products going forward.

“We are attempting to give India and world a market that people understand better has more products going forward and better access to all categories of investors. Some of the steps that we are taking might seem to be inconsistent with our long term direction, But it’s not always that every short term measure should be in the same direction as long term roadmap. On occasion, you tend to move back a bit”, he said.