Union Minister of Finance and Corporate Affairs, Nirmala Sitharaman inaugurated the Corporate Debt Market Development Fund (CDMDF) and initiated muhurat trading on the Limited Purpose Clearing Corporation mechanism, known as AMC Repo Clearing Limited (ARCL), in Mumbai on Friday. Distinguished guests, including Ajay Seth, Secretary, Department of Economic Affairs (DEA), and Madhabi Puri Buch, Chairperson, SEBI, graced the occasion. These initiatives are aimed at deepening the functioning of the corporate debt markets and fostering growth.
Sitharaman said: “Indian capital markets have been a trendsetter of sorts in many aspects of trading, including being one of the fastest in terms of settlement of trade and also in certain areas related to risk mitigation and governance. Our equity markets have witnessed broad-based participation from all segments – retail investors with more than 11.5 crore Demat accounts on one side of the spectrum to Small and Medium Enterprises (SMEs) raising funds through IPOs on the other. We are witnessing a robust and all-around growth of financial markets today.”
The FM announced that the Government has taken a decision to enable direct listing of listed/unlisted companies on IFSC exchanges, which will be operationalised shortly enabling start- ups and companies of like nature to access the global market through GIFT IFSC. This will also facilitate access to global capital and result in better valuation for Indian companies. FM added that the government’s vision for GIFT-IFSC transcends much beyond the realm of traditional finance and ventures into the realm of thought leadership. “We envision it as the true embodiment of Atma Nirbhar Bharat, a hub of ingenuity and innovation. As announced in this year’s budget, through property tax governance reforms and ring-fencing user charges on urban infrastructure, the Government is incentivising cities to improve their credit worthiness for municipal bonds,” she added.
Sitharaman informed that 10 years ago, India’s market capitalisation stood at Rs 74 trillion. It has almost doubled every 5 years, reaching Rs 300 trillion today. Unique Mutual Fund investors have grown from under 1 crore in 2014 to about 4 crore today. REITs and InvITs have also witnessed tremendous growth over the last 5 years, with their combined NAV surging from under 100 billion to about Rs2.5 trillion today.
Sitharaman urged that the regulatory environment must strive to balance, at all times, the creation of a conducive environment for starting and running businesses, maintenance of market integrity and sustenance of market stability. It is a possible trinity.
The Limited Purpose Clearing Corporation (LPCC) named as AMC Repo Clearing Corporation started functioning with the first transaction done today. LPCC has been set up with the purpose of clearing and settlement of corporate bond repo transactions and to develop an active repo market, which will, in turn, improve liquidity in the underlying corporate bond market.
