New Delhi: The Reserve Bank of India on Wednesday constituted a task force on the development of the secondary market for corporate loans. The setting up of the task force was a part of the statement on Developmental and Regulatory Policies issued along with the first bi-monthly monetary policy for the yr 2019-20 on April 4, 2019.
Besides, the task force would suggest policy and regulatory interventions required for the development of the secondary market in corporate loans, including loan transaction platform for stressed assets.
Headed by Canara Bank Chairman T N Manoharan, a six-member body has been set up to review the existing state of the market for loan sale or transfer in India as well as the international experience in loan trading, stated the RBI.
Secondary loan market in India is largely restricted to asset reconstruction companies and ad hoc sale to other lenders, including banks, and no formalised mechanism has been developed to deepen the market.
A well-developed secondary market for debt will also aid in transparent price discovery of the inherent riskiness of the debt being traded, the Reserve Bank of India said while announcing about the task force.
The task force has also been asked to make recommendations for creation of a loan contract registry to remove information asymmetries between buyers and sellers, its ownership structure and related protocols such as standardisation of loan information, independent validation and data access.
The task force has been asked to submit its report by the end of August 2019.
(With agency inputs)