Finance Minister Nirmala Sitharaman said on Friday announced listed and unlisted Indian companies will be enabled to list directly on the exchanges at International Financial Services Center (IFSC) to facilitate access to global capital and better valuation.
Speaking at the launch of Corporate Debt Market Development Fund (CDMDF) and the AMC Repo Clearing Limited (ARCL) in Mumbai, Sitharaman lauded financial market developments and the mobilisation of domestic savings into financial assets.
The announcement comes as a follow up to an earlier decision by the government to allow the direct listing of Indian companies in foreign jurisdictions.
“We are competing with not only other emerging markets, but also with the advanced economies to attract investments. We need to enhance the mobilisation of domestic savings towards financial assets by easing access to the financial markets and strengthening investor grievance mechanisms,” she said.
Earlier in July, the National Stock Exchange successfully transitioned Nifty contracts from the Singapore Exchange (SGX) to NIFTY IFSC in Gujarat International Finance Tec-City (GIFT City).
On July 25, Gift Nifty derivatives recorded an all-time high of $12.39 billion in a single-day turnover.
Advocating for a review of regulatory processes, Sitharaman urged all financial regulators to set timelines to decide on applications and maintain a balance between light-touch regulation and full-fledged supervision.
The minister reiterated that public consultations will be made integral to the process of regulation making and issuing subsidiary directions and that there was a need to review the outdated norms.
“Such reviews need to be comprehensive and become a permanent part of the regulatory life cycle. Time limits to decide the applications under various regulations should be laid down in the interest of ease of doing business and for being responsive,” said Sitharaman.
Adding that the market regulations should be proportionate to the risk, she called for a regulatory impact assessment to critically assess the positive and negative effects of proposed and existing regulation and non-regulatory alternatives.
“It is an important element of evidence based policy making and I feel this can enhance accountability and transparency in the decision making process,” said Sitharaman.
On the launch of debt backstop facility and ARCL, Ajay Seth, Secretary – Department of Economic Affairs, said though it may take time to bring volumes on these platforms, these efforts will lead to a robust development of the debt market.
CDMDF, a Rs 30,000 crore backstop facility for the debt market, was cleared by the capital markets regulator, the Securities and Exchange Board of India (Sebi), in March while the ARCL was first approved in-principle two years back.
The corpus for CDMDF will be created by pooling money from debt schemes. Debt schemes — excluding passive, overnight, and gilt funds — will contribute 25 basis points (bps) of their assets under management towards the creation of the CDMDF.
The initiative aims to provide liquidity to debt schemes during periods of market stress.
Meanwhile, the ARCL will help all regulated entities — such as AMCs, insurance companies, market makers, and short-term traders — take positions and manage their risks in listed corporate bonds and debentures (non-convertible debt securities), commercial papers, and certificates of deposit.